China Is America’s Enemy: Make No Mistake About That

While it would certainly be nice to think of China as a benign, friendly, democratic nation, if not an ally of the United States—which makes the computers and cellphones that Americans use, and provides most of the products sold in Walmart stores—the fact is that China is our enemy, now and in the future. A failure to recognize this fact has serious national security implications for our great nation. Those who cavalierly dismiss this and similar assessments, as nothing more than the rantings of “Cold Warriors,” may be condemned to repeat and relive the world wars of the past.

Does this mean that we will be in a shooting war with China any time soon, or that we should gird for war in the future? No, but it means that we must maintain and strengthen our military might, and do nothing to diminish it. We face deadly challenges elsewhere in the world too: for example, from North Korea, Iran, Russia and terrorists. However, we must never underestimate the threat from China, America’s rising Asian rival globally. Among other things, there is a “disconnect” between China’s civilian and military leaderships, which may grow dramatically—and it does not bode well for the future.

As the Wall Street Journal reported:

China conducted the first test flight of its stealth fighter just hours before U.S. Defense Secretary Robert Gates sat down with President Hu Jintao here to mend frayed relations, undermining the meeting and prompting questions over whether China’s civilian leadership is fully in control of the increasingly powerful armed forces.[2]

In early 2001, at the beginning of George W. Bush’s presidency, China’s military tested his metal by forcing down one of our spy planes near the island of Hainan. There were serious questions raised then—as they are being raised now—about whether China’s civilian leadership was fully in control of the country’s military.

Also, the New York Times had a fine article recently, which stated in part:

Older Chinese officers remember a time, before the Tiananmen Square protests in 1989 set relations back, when American and Chinese forces made common cause against the Soviet Union.

The younger officers have known only an anti-American ideology, which casts the United States as bent on thwarting China’s rise.

. . .

Chinese military men, from the soldiers and platoon captains all the way up to the army commanders, were always taught that America would be their enemy.[3]

Viewed in its starkest terms, China has threatened a nation-ending EMP Attack against the United States already—which went largely unnoticed by most Americans, even though such an attack might kill all except 30 million of us.[4] In addition to its submarine forces that have been expanded greatly in the past decade, China’s military is deploying new ballistic missiles that can sink U.S. aircraft carriers, and are potentially game-changing, unprecedented threats to our supercarriers and their carrier battle groups.[5]

Also, China is preparing to build an aircraft carrier, which symbolizes the ambition to move far beyond its own shores[6]. Its growing anti-satellite capabilities and quite soon its fifth-generation fighter, not to mention its ongoing Cyberwarfare and economic warfare, are alarming to say the least.

Barack Obama manipulated the 2010 lame-duck session of Congress to ratify the “90 percent useless and 10 percent problematic” New START Treaty with Putin’s Russia—from which the next Republican administration should withdraw[7], just as George W. Bush withdrew from the ABM Treaty, which had expressly prevented major American advances in missile defense. However, the United States’ focus must be on China, not on an essentially-Third World, backwater country like Russia.[8]

As one China military-affairs specialist put it:

Clearly, China’s communist leadership is not impressed by the [Obama] administration’s ending of F-22 production, its retirement of the Navy’s nuclear cruise missile, START Treaty reductions in U.S. missile warheads, and its refusal to consider U.S. space warfare capabilities. Such weakness is the surest way to invite military adventurism from China.[9]

On the positive side, China represents an enormous consumer market. Yet, even on that front, caution is advised and prudence is required. As the Wall Street Journal noted:

It’s tempting for U.S. companies to believe they can rely on access to hundreds of millions of new consumers in China and other emerging-market countries for the lion’s share of future profits. But they had better be prepared for a wide variety of unforeseen barriers.[10]

The United States has other issues and problems with China, including but not limited to Chinese adoption policies that foist “sick” children on unsuspecting, needy American adoptive parents, leading to tragic human suffering and other consequences[11]; China’s human rights abuses, including political prisoners who often serve their terms in an archipelago of labor camps scattered across the country called Laogai[12]; North and South Korea—and their respective international protectors, China and the U.S.—which might be heading for a showdown in the future[13]; and China’s expanding influence in the world, such as its willingness to bail out debt-ridden countries in the euro zone[14].

China has a violent history, which is of recent vintage. Indeed, the Soviet Union’s Joseph Stalin and China’s Mao Tse-tung were the most ruthless killers of their own people in the 20th Century, and perhaps in the entire history of mankind. Mao was directly responsible for an estimated 30-40 million deaths between 1958 and 1960, as a result of what his regime hailed as the “Great Leap Forward.”[15] Even though human rights activist Liu Xiaobo won the 2010 Nobel Peace Prize—after having been sentenced to prison for putting his name to the “Charter 08″ human-rights manifesto, which says that the Chinese people “see clearly that freedom, equality, and human rights are universal values”—he was denied the right to have a representative collect the prize for him.[16]

Perhaps the best hope for a democratic China at peace with the world rests with the expansion of human rights in the country, as well as consumerism and capitalism; and greater civilian control over the country’s potentially-renegade military. Whether this hope comes to fruition, or ends up as a pipe dream, remains to be seen. Will China’s bluster and swagger lead to war, or dissipate over time; and are the United States and China on a collision course in the Western Pacific and elsewhere?[17] Only time will tell. However, one can never forget that China’s violent past was only a short time ago, and its human rights abuses continue to this day.

[1] Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass). He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates, which specializes in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and http://www.naegele.com/naegele_resume.html). He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University. He is a member of the District of Columbia and California bars. He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal. Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g., www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com

Like Stalin, Mao’s crimes involved Chinese peasants, many of whom died of hunger from man-made famines under collectivist orders that stripped them of all private possessions. The Communist Party forbade them even to cook food at home; private fires were outlawed; and their harvests were taken by the state. Those who dared to question Mao’s agricultural policies—which sought to maximize food output by dispossessing the nation’s most productive farmers—were tortured, sent to labor camps, or executed.

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This is the subtitle of the first of two important articles in the UK’s Economist—entitled, “Discord”—which states:

WHAT has happened to the “harmonious world” that China’s president, Hu Jintao, once championed? Where is the charm offensive that was meant to underpin it? Recent revelations about its military programmes are the latest Chinese moves to have unsettled the world. Strip the charm from Chinese diplomacy and only the offensive is left. Sino-American relations are at their lowest ebb since a Chinese fighter collided with an American EP-3 spyplane a decade ago.

In the past few weeks China has made a splash with progress on an anti-ship missile and a stealth fighter jet. Every country has legitimate interests and the right to spend money defending them, especially a growing power like China. But even if their purpose is defensive, such weapons will inevitably alarm America and China’s neighbours. In the harmonious world China says it seeks, assertiveness needs to be matched with reassurance and explanation. Yet China undermined the confidence-building visit this week to Beijing of Robert Gates, America’s defence secretary, when it staged a test flight of the new jet. It was an unfortunate curtain-raiser for the visit of China’s president, Hu Jintao, to Washington on January 18th.

Sino-American relations have been deteriorating for a year. On his first visit to China in 2009 President Barack Obama was treated with disdain, and the Chinese government reacted with fury when he sanctioned arms sales to Taiwan that were neither a surprise nor game-changing and saw the Dalai Lama—also routine for American presidents. China broke off military-to-military contacts and officials suddenly stopped returning American diplomats’ calls.

Tensions have also been growing with neighbours that China was once careful to cultivate. China has more forcefully asserted sovereignty over great swathes of the South China Sea. It overreacted after a Chinese trawler rammed a Japanese coastguard vessel in contested waters controlled by Japan. It got into a spat with India over visas for Kashmiri residents. And it failed to condemn the North Korean sinking of a South Korean corvette and the shelling of a South Korean island. Even Africa, once extremely friendly to China, is having doubts. Anger in Zambia is growing over Chinese managers who shot at mine workers.

Whereas a single incident sparked the spyplane crisis, today’s tensions are the culmination of lots of different things. China’s new raw-knuckle diplomacy is partly the consequence of a rowdy debate raging inside China about how the country should exercise its new-found power. The liberal, internationalist wing of the establishment, always small, has been drowned out by a nativist movement, fanned by the internet, which mistrusts an American-led international order. Western hawks conclude that China has broken with the pragmatic engagement it has followed for three decades. Its tough new line, they say, warrants an equally tough response.

Don’t underestimate America

China’s recent behaviour is in part the product of a miscalculation, dating from the global financial crisis. Many Chinese believe that America’s power has gone into an inexorable decline. Chinese leaders’ preoccupation with sweeping changes to the Communist Party hierarchy in 2012 may be helping to reinforce this belief. At a time of domestic uncertainty, running down the foreign opposition is popular.

America is certainly losing clout in relative terms, but it will remain the world’s most fearsome military power for a very long time. If China behaves as though America is weak, and seeks to push back its power, a querulous but well-tended relationship could slide into competition and confrontation and bring about a cold-war stand-off or rivalry for influence in neighbouring states. Already, China’s tough new attitude is having an effect. America has redoubled its commitment to policing the South China Sea. Japan and South Korea have just announced closer defence co-operation. This does not serve China’s interests.

The second and related Economist article about China is entitled, “Wary detente between China and America: Another go at being friends”—which is subtitled, “A troubled year gives way to handshakes, but tensions between the United States and China are likely to grow”—and it states:

CHINA’S President Hu Jintao arrives in America on January 18th for a welcome at the White House, full of pomp and pageantry, that American presidents seldom lay on even for the closest of friends. After an unusually rocky year in their relations, both China and the United States hope for respite. But mutual wariness is growing, thanks not least to China’s hawkish army.

The role in Chinese policymaking of the People’s Liberation Army (PLA, which includes the navy and air force) is only dimly understood by outsiders. But the PLA is clearly far less eager than the civilian leadership to mix with America. It needed persuading to acquiesce to a visit to Beijing by America’s defence secretary, Robert Gates, from January 9th to 12th, his first to the country in three years.

China’s leaders apparently hoped that Mr Gates’s trip would help restore a semblance of normality to the two countries’ ties as Mr Hu prepared for his American visit. Mr Hu is no America-lover himself, but like his predecessor, Jiang Zemin, he enjoys being received by the superpower with full ceremonial honours. When Mr Hu last went to Washington, DC, in 2006, China called it a state visit but the White House called it an official one, implying a slightly lesser grade. This time both agree it is a state one, which means all the razzmatazz of a dinner at the White House.

Allowing Mr Gates to visit at all was a concession. China had cut off top-level military exchanges with America in January 2010, in response to Barack Obama’s approval of $6.4 billion of arms sales to Taiwan. Mr Gates had hoped to visit China last June. After being rebuffed, he said he was “disappointed” that the PLA had “not seen the same potential benefits from this kind of military-to-military relationship” as the country’s civilian leaders.

Despite China’s increasingly assertive military posture in the western Pacific, a region where America’s armed forces have long held sway, communication between the two sides is minimal at the best of times. During Mr Gates’s last visit to Beijing, his hosts agreed to set up a hotline between the Pentagon and China’s defence ministry. In 2009 it proved useless when tempers flared over a standoff between Chinese boats and an American surveillance vessel in the South China Sea.

Just as worryingly, communication between China’s leadership and the PLA appeared to Americans to be faulty, of which a striking indication came while Mr Gates was in Beijing. During a meeting with Mr Hu, Mr Gates mentioned the test flight earlier in the day of a Chinese stealth fighter, the J-20, China’s first aircraft supposed to evade radar. Speculation about progress on the highly secretive project has intensified with the appearance online of photographs of a J-20 at an airfield. The flight on January 11th, video of which appeared on unofficial websites, was the first ever reported. But Mr Hu and other officials in the room appeared to be unaware of it, a Pentagon official claims.

If so, an interpretation is that this was a slap to Mr Hu, who as chairman of the Communist Party’s Central Military Commission is supposed to be in charge of the armed forces. Mr Gates said later he had had “concerns over time” about the PLA acting independently of the political leadership. All the more important, he said, to set up a security-related dialogue between the two countries involving both civilian and military officials.

Mr Gates wants a regular forum at which the two sides discuss issues such as nuclear weapons, missile defence, cyber-warfare and space. The Chinese show polite interest, but have given no commitment. Michael Swaine of the Carnegie Endowment for International Peace says such talks are not bound to take place; the two countries’ armed forces are growing “increasingly suspicious” of one another.

A chief Pentagon concern is China’s development and purchase of missiles making it more difficult for American aircraft carriers to operate in the western Pacific. The missiles include the DF-21D, a medium-range ballistic missile. In December the head of the United States Pacific Command, Admiral Robert Willard, said that the DF-21D had reached “initial operating capability”. The weapon would use data fed by satellites and other surveillance devices to home in on a moving carrier more than 1,500km (930 miles) offshore. Pentagon officials say work on the DF-21D (which would be the first such missile deployed by any army) and the J-20 fighter has progressed faster than they had expected. China is also reportedly close to deploying its first aircraft carrier, a refitted ex-Soviet ship. It may be a long time before any of these can challenge America’s military domination of the Pacific, but they may constrain what the United States can do in waters around China—and Taiwan.

Of the three developments, the DF-21D is the greatest worry to the Americans. Their Aegis missile defence system, deployed to protect American carrier groups, is designed to track a missile’s trajectory from launch. The DF-21D is supposed to be able to change course in mid-flight so as to evade Aegis interceptors. Lockheed Martin, which makes the Aegis system, is trying to come up with a fix. As for the J-20, some scepticism is in order. Although the design has stealth characteristics, its large nose canards, big engine intakes and fixed-thrust nozzles suggest the Chinese have a long way to go before they have a plane that is close to America’s F-22—call them the PLA’s “three shames”.

In America Mr Hu will be at China’s usual pains to stress it wants only peace. He will highlight China’s “soft power”, a concept he began publicly embracing in 2007. Mr Hu plans to visit a Chinese-owned factory making car parts and a school where Chinese is taught with support from China. Yet any cheer Mr Hu generates between the two governments could prove short-lived. Qu Xing of the China Institute of International Studies says the visit will mark the end of a downturn in relations. But, he says, unless America learns to respect China’s “core interests”, another will surely come.

The most critical issue involving China is whether its civilian leadership is fully in control of its increasingly powerful armed forces. This is the “800-pound gorilla” that may reign and govern in the future, with respect to whether China evolves into a democratic nation at peace with the world, which does not trigger wars in the future.

As I have written in the article above:

[T]he best hope . . . rests with the expansion of human rights in the country, as well as consumerism and capitalism; and greater civilian control over the country’s potentially-renegade military. Whether this hope comes to fruition, or ends up as a pipe dream, remains to be seen. Will China’s bluster and swagger lead to war, or dissipate over time; and are the United States and China on a collision course in the Western Pacific and elsewhere? Only time will tell. However, one can never forget that China’s violent past was only a short time ago, and its human rights abuses continue to this day.

Actions speak louder than words. China’s “charm offensive” is illusory, inter alia, because it never really existed. Yes, Hu Jintao and the Chinese delegation are likely to turn on the charm again when they visit the United States, but the reality is clear. China is America’s enemy, and there are no signs of that abating in the future.

If “America is . . . losing clout in relative terms,” as the Economist asserts, it is because of the ruinous presidency of Barack Obama, which hopefully ends no later than January of 2013.

Almost half of Americans (47%) think it’s China, according to a poll by the Pew Research Center for the People & the Press, while only 31% think the United States is still out front.

Game over. No wonder China comes out top in a list of countries representing the “greatest danger” to the U.S., just above North Korea—and well above Iran—in the same poll.

In fact, the U.S. economy is about three times the size of China’s in nominal terms, and its GDP per capita is roughly 10 times bigger. But when it comes to popular perceptions of China in America, those facts apparently don’t matter. Ahead of President Obama’s meeting next week with his Chinese counterpart, Hu Jintao, the one statistic everybody is looking at is the alarming unemployment rate, hovering just below 10%. For China, it’s around 4%.

Americans are worried about jobs, and China is widely perceived as stealing them, through mercantilist trade policies, an undervalued currency and other underhanded methods. The same poll finds that 53% of respondents think the U.S. should get tougher with China on economic and trade issues.

The United States, it’s often said, needs a good global rivalry to get it going. In the decades after World War II, the former Soviet Union served that purpose. Japan was the bogeyman back in the 1980s when its economy was on a tear.

Now it’s China’s turn.

American politicians have done a fine job translating China-phobia into votes. With Mr. Hu’s visit, however, the Obama administration has to be a bit cautious. On the one hand, Mr. Obama needs to show some concrete results from the meeting, particular on currency. But his administration must also manage public expectations. Mr. Hu also has to attend to a domestic constituency, which increasingly is portraying the U.S. as the Big Threat and is in no mood for concessions. A stronger yuan, and more liberal Chinese investment rules, won’t magically restore U.S. jobs. And China is a bright spot for U.S. exporters: A trade war would hurt both sides.

Hence the caveats in a speech by Timothy Geithner, the U.S. Treasury Secretary, delivered on Wednesday at the Johns Hopkins School of Advanced International Studies in which he draws up a long laundry list of U.S. complaints about China.

“Even as we work to encourage further reforms in China,” Mr. Geithner said, “we need to understand that our strength as a nation will depend, not on choices made by China’s leaders, but on the choices we make here at home.”

Interestingly, while Americans tend to grossly exaggerate China’s economic prowess, Chinese themselves downplay it. A recent poll conducted by the Global Times, a Chinese Communist Party tabloid, found that only 12% of respondents believe that China has already become a superpower.

This is the title of an article in the UK’s Financial Times, which states in part:

China must reduce unfair subsidies, stop the theft of intellectual property and let its currency appreciate, Tim Geithner has said.

The US Treasury secretary, in a speech on Wednesday ahead of next week’s visit by Hu Jintao, Chinese president, widened US concerns about Chinese economic policy well beyond currency, which has been a focus of Capitol Hill’s anger.

. . .

China should promote competition by reducing implicit state subsidies to companies—from low-cost finance, land and energy—and clamp down on the theft of intellectual property from foreign companies, he said. The world needed “a more level playing field for US companies that compete with Chinese companies in China, in the United States and around the world”.

Addressing the rising Chinese currency, Mr Geithner said the current rate of appreciation of about 6 per cent a year—closer to 10 per cent in real terms because of higher Chinese inflation—was substantial but inadequate. “We believe it is in China’s interest to allow the currency to appreciate more rapidly in response to market forces.”

He said China’s moves to relax capital restrictions to allow more trading in the renminbi were significant.

Mr Geithner’s wider focus chimes with the views of many business organisations and some senior Republicans in the US House of Representatives.

Business groups say the exclusive attention on the currency issue has distracted from problems such as the protection of US investments in China.

. . .

Mr Hu’s visit is likely to be marked by attention-catching announcements on investment and trade, including agreements on environmental technology. Chinese subsidies to alternative energy industries, such as solar and wind power equipment, have become a bone of contention between Washington and Beijing. In December Washington began a case over such state support against Beijing at the World Trade Organisation, though that was sparked by complaints by US unions rather than companies, many of which are more interested in operating in China than exporting goods made in the US.

Mr Geithner sought to reduce the blame attached to China for the US’s economic woes. “Fundamentally, how many jobs and how much wealth we create will be the result of the choices we make in the United States—not the choices of others,” he said.

Gates Tries To Obscure Fact That China’s Armed Forces Operate Independently Of Civilian Control, And That Command And Control Of Its Nuclear Weapons Is Uncertain

U.S. Defense Secretary Robert Gates has asserted that he is confident of China’s civilian control over its military, on the eve of next week’s visit to Washington by Hu Jintao, the Chinese president. This is pure political spin by Gates, and is at odds with the facts and with his earlier statements.

Perhaps most importantly, a Los Angeles Times article on the subject contained a paragraph that stated:

As always, China’s approach and tactics are well choreographed and calculated.

. . .

Americans’ ace in the hole is that if we were to stop buying goods produced in China, their economy might collapse. Americans are very nationalistic; and a “boycott China” movement might gain momentum, and bring them to their knees.

However, once again, the key factor from China’s standpoint is whether there is or will be civilian control of the country’s armed forces and nuclear weapons. If not, . . . ___.

While I disagree with most of your writing on the subject of China and its government as well as other writings, I will give you credit for your expression and well thought-out points. It is important to listen and read counterpoints as we all have tainted glasses on.
Cheers.

Thirty years ago my father said the next major war would arise out of China as generations of males were being raised without girls to marry. He didn’t know what the pretext of the war would be, but that would be its root; excess sons to waste on conflict.

Similarly, my paternal grandfather was very concerned about America being drawn into a war in the Middle East. He was against it because he believed it was not in our best interests. He did not articulate his concerns or reasons—at least to me—beyond that.

This is the title of a Wall Street Journal editorial that is subtitled, “If Beijing wants to be treated like an equal, it should act like one.” It states in pertinent part:

When Robert Gates met Hu Jintao in Beijing last week, the Defense Secretary raised the very public test of a new stealth fighter jet that coincided with his visit. The Chinese President expressed surprise at the news, asking his military colleagues whether it was true.

China watchers interpret this in two ways, neither one reassuring. Either the Chinese military took the initiative to embarrass their American guest without the knowledge of the civilian leadership. Or Mr. Hu was complicit in the unprecedented and clearly deliberate leak of the new plane’s maiden flight to send Washington a message: China has the muscle to start pushing the U.S. out of Asia.

Whichever the case, the fighter test is consistent with an emerging pattern of aggressive Chinese behavior, and it sets a tone for Mr. Hu’s state visit to Washington this week. In the two years since President Obama came to office, China has picked naval fights with the U.S., Indonesia and Japan; openly bullied Norway in anticipation of Liu Xiaobo’s Nobel Peace Prize; provided diplomatic cover and proliferation aid to North Korea; conducted a cyberattack on Google; and imprisoned foreign businessmen on trumped-up espionage charges. It has also made claims to the Yellow and South China Seas based on preposterous interpretations of long-standing international conventions.

What explains this turn after three decades of relatively benign behavior on the international stage? Increasing economic confidence and clout—magnified by the current economic troubles of Japan, Europe and the U.S.—is surely a part of it. Of course that clout was gained in substantial part from a free-trading global economic order secured by American military might and underwritten by American dollars.

. . .

What is new and troubling is China’s willingness to challenge the security status quo without much apparent concern for the world’s reaction. That’s especially true in its own neighborhood, where its provocations and bad faith (especially its defense of North Korea’s aggression) are leading Japan, Taiwan and South Korea to strengthen security ties with the U.S. China has also gone far to undermine U.S. and even United Nations efforts to stop a nuclear breakout by Iran and other global rogues.

. . .

All of these moves are assertions of Chinese nationalism, which has become, along with economic growth, a pillar of the ruling Communist Party’s claims to legitimacy. Historians of China may note that such nationalism is bound to play a role in a country that sees itself as only now emerging from two centuries of subservience to barbarian interlopers. But China’s new truculence is once again raising concern that Beijing is intent on dominating its region and destabilizing the world order, much as the Kaiser’s Germany did a century ago.

How should the U.S. respond? Nearly four decades of engagement with Beijing have yielded important benefits for both sides, including the rise of hundreds of millions of Chinese out of poverty and the mutual benefits of a robust trading partnership. The U.S. would be less affluent today without Chinese goods and markets. And China’s rise could not continue if U.S. policy makers came to see economic ties with China as a zero-sum game.

For President Obama the challenge of this week’s summit is to persuade his guest that the U.S. will continue to encourage China’s economic rise but is also determined to block China’s power plays in its neighborhood and beyond. A China that understands that to be treated as an equal it must behave like one is a country whose progress will not be obstructed.

Lots of people will try to “sugar coat” these issues; however, the facts are irrefutable. As I concluded in the article above:

Perhaps the best hope for a democratic China at peace with the world rests with the expansion of human rights in the country, as well as consumerism and capitalism; and greater civilian control over the country’s potentially-renegade military. Whether this hope comes to fruition, or ends up as a pipe dream, remains to be seen. Will China’s bluster and swagger lead to war, or dissipate over time; and are the United States and China on a collision course in the Western Pacific and elsewhere? Only time will tell. However, one can never forget that China’s violent past was only a short time ago, and its human rights abuses continue to this day.

Lastly, by reason of its reference to “a zero-sum game,” presumably the Journal is referring to a situation in which America’s gains would result from China’s losses. Or to put it another way, if American consumers rejected or boycotted goods from China, its economy might collapse in short order. Perhaps Americans might wish to send this message to China loud and clear, in the near future.

In Marked Contrast To The Regal Welcome Given By Obama To China’s Hu . . .

. . . The Dalai Lama Was Ushered Out Past White House Trash

What is crystal clear is that Obama’s presidency must end no later than January of 2013, when he is sent packing either to Chicago or Hawaii to lick his political wounds and write his memoirs, and work full time on his presidential library.

In an important article about China—which is subtitled, “We all learned at school how the status quo powers mismanaged the spectacular rise of Germany before World War I, a strategic revolution so like the rise of China today”—the UK Telegraph’s Ambrose Evans-Pritchard has written:

[W]e all learned how the Kaiser overplayed his hand. That much was obvious.

Yet it is difficult to pin-point exactly when the normal pattern of great power jostling began to metamorphose into something more dangerous. . . .

. . .

Is China now where Germany was in 1900? Possibly. There are certainly hints of menace from some quarters in Beijing. Defence minister Liang Guanglie said over New Year that China’s armed forces are “pushing forward preparations for military conflict in every strategic direction”.

Professor Huang Jing from Singapore’s Lee Kwan Yew School and a former adviser to China’s Army, said Beijing is losing its grip on the colonels.

“The young officers are taking control of strategy and it is like young officers in Japan in the 1930s. This is very dangerous. They are on a collision course with a US-dominated system,” he said.

. . .

Senate Majority Leader Harry Reid called Mr Hu a “dictator”. Is this a remotely apposite term for a self-effacing man of Confucian leanings, whose father was a victim of the Cultural Revolution, who fights a daily struggle against his own hotheads at home, and who will hand over power in an orderly transition next year?

. . .

Factions in Beijing appear to think that China will win a trade war if Washington ever imposes sanctions to counter Chinese mercantilism. That is a fatal misjudgement. The lesson of Smoot-Hawley and the 1930s is that surplus states suffer crippling depressions when the guillotine comes down on free trade; while deficit states can muddle through, reviving their industries behind barriers. Demand is the most precious commodity of all in a world of excess supply.

The political reality is that China’s export of manufacturing over-capacity is hollowing out the US industrial core, and a plethora of tricks to stop Western firms competing in the Chinese market rubs salt in the wound. It is preventing full recovery in the US, where half the population is falling out of the bottom of the Affluent Society. Some 43.2m people are now on food stamps. The US labour force participation rate has fallen to 64.3pc, worse than a year ago. Only the richer half is recovering.

. . .

China’s economic and military goals are in conflict. One defeats the other.

. . .

A cocky China needs to watch its step, as does a rancorous America, before resentments feed on each other in a Wilhelmine spiral.

The Chinese have no recent history of sweeping territorial expansion (except Tibet). The one-child policy has left a dearth of young men, and implies a chronic aging crisis within a decade. This is not the demographic profile of a fundamentally bellicose nation.

The correct statecraft for the West is to treat Beijing politely but firmly as a member of global club, gambling that the Confucian ethic will over time incline China to a quest for global as well as national concord.

The Washington Times’ editorial following Barack Obama’s 2011 “State of the Union” speech is excellent, worth reading and reflecting on, and it states in pertinent part:

President Obama‘s announcement on Tuesday that “this is our generation’s Sputnik moment” came across as puzzling.

. . .

Nothing has happened recently that could be roughly analogous to Sputnik. The launch drew its shock value from the context of the Cold War, when the Soviet Union was America’s bitter adversary. It had been less than a year since Nikita Khrushchev had said, “Whether you like it or not, history is on our side. We will bury you.” In the 1950s the U.S. missile program suffered a series of high-profile failures and seemed to be failing. The Soviet program had its disasters too, but they were hushed up, so the success of Sputnik seemed to come out of nowhere. It seemed to confirm that their German scientists were far ahead of our German scientists.

The sense of national purpose that followed the Sputnik launch was not based on an abstract sense of the need for better education programs; it was a national security emergency. In those days lagging behind in the technology race could literally be fatal. Mr. Obama has failed to conjure the same sense of looming disaster, excepting the national state of alarm over his irresponsible deficit spending.

. . .

Mr. Obama’s call is more abstract. It poses no concrete objective, like putting a man on the moon. Mr. Obama was simply touting his new budget proposal. He would like to see the same level of national commitment as during the space race, but without a goal, without passion, and certainly without identifying any country as an adversary. In fact his self-possessed “Sputnik moment” is a lifeless call for more aimless government programs and regulatory meddling.

Invoking space race metaphors is a risky proposition for Mr. Obama. On his watch NASA killed its plan to return to the moon and has scaled back most of its other programs. But competition in space is alive and well. Last October China sent an unmanned probe into Moon orbit to map possible landing sites. The People’s Republic is expected to make a manned moon landing sometime this decade. The Obama administration has done its best to curry favor with Beijing, which in return has exploited American technology and open markets, and treated the United States with disdain.

Maybe when the red flag is flying on the lunar surface the United States will have a true Sputnik moment, the shocked realization that while the rest of mankind is making giant leaps, Obama’s America can manage only small steps.

Barack Obama is a far-Left, anti-war, naive, raving narcissist whose actions have saddled the United States with unprecedented debt, and have been weakening this great nation at every turn. He must be removed from office before he can do even greater damage.

The biggest impediment to the continued growth in Chinese power is their own faith in centralized top down control.

China has achieved its impressive growth of the last few decades by allowing market forces to work – by not trying to direct from the top down.

They don’t seem to appreciate this recent history given their moves to boldly force the transfer of important technologies from Western and Japanese firms directly to their own domestic companies. Yes, it will succeed – to some extent – but ultimately it will create an unfavorable response as the market participants move to protect themselves and ultimately lead to suppressed growth rates and a lower standard of living. In any case, as the Japanese have discovered, in the long run the market will beat any group of bureaucrats in deciding how to allocate resources.

Also it is important to appreciate just how integrated we all are in a rapidly globalizing economy. We all have much more to gain by allowing the process to continue than by hindering its development. One major impediment is that the integration process causes dislocation among specific groups, which respond, because of the persistent habit of most people to impose political boundaries on top of what is an economic and cultural phenomenon, through actions taken politically from within their nation states that inhibit overall growth.

And yes it’s very possible that rogue military elements could bring about a major war through revanchist sentiments. The average Chinese tends to feel that China has been deeply wronged by the outside world and that China must seize a prominent role in the world. Their concept of ‘fair’ in this is extremely different than that of the typical well off liberal in the West and their often aggressive unfair actions will mystify people.

The Chinese military is systematically developing very effective asymmetric means to defeat American forces that they expect to confront in asserting their fair share of prominence. Soon it is very likely that we will reach a point in which our defending Taiwan will become impractical. In any case the best defense must come from the Taiwanese themselves. IMO this will consist of their own Taiwan based set of ICBM’s and ballistic submarine based missiles with nuclear warheads. These together with a clear communicated intention to wipe out all major mainland cities if Taiwan is invaded or blockaded will probably be enough to facedown any rogue elements. Short of that a confrontation with American forces over Taiwan is coming and it is one we will likely lose given the distance from us and proximity to mainland China.

China is both an enemy and a friend and trying to put them in one or the other is to impose unrealistic assumptions on the larger picture developing as the two cultural and political centers integrate economically.

Why is he silent when the forces of democracy are moving in China—like he was silent and failed to come to the aid of those courageous Iranians who were tortured and killed after rising up in protest against the disputed victory of President Mahmoud Ahmadinejad, following the 2009 Iranian presidential election?

It’s much too soon to conclude that Obama will not be reelected. I remember what happened with Clinton and Dole in 96.

The key to making sure he’s not reelected is to link him to the growing troubles both here and abroad arising out of his extremely foolish and delusional economics and energy policies.

His administration refuses to permit new drilling for oil in the Gulf. That would be bad enough.

Worse his fiscal policies (the stimulus etc) and his Keynesian buddy Bernanke’s foolish QE monetary policies are laying the groundwork for intense political flare ups abroad as the liquidity Bernanke is injecting here flows abroad first causing inflation and conflict as people living on the margins see their food and fuel prices climb out of their reach. This is unnecessary.

Another year or so of this nonsense and we will up to our ears in Egypts and Libyas. The Chinese government is doing a lot all by themselves to create economic problems. But I suspect that in part the bout of inflation causing unrest in China is due to the recent QE and the Chinese inability to counteract its effects flowing into their backyard.

We’re going to get hit several times over because we have such a clueless prof as president. First here for his horribly misguided fiscal and monetary policies. That would be bad enough, but his mismanagement of our economic situation – the downturn which started in 06 – is flowing overseas exacerbating the downturn’s effects over there. Second, as problems both here and overseas grow Obama will continue to make major mistakes in handling them e.g. Iran, Egypt, Libya, China, Wisconsin!!, more to come.

Obama is Carter on steroids and we are all going to suffer for his backwards primitive worldview stuck in a Leftist’s Alice in Wonderland nightmare as to how the world works. Hopelessly muddled.

Thank you for your thoughtful comments as always. I have taken the liberty of using your phrase for the title of this response. 🙂

I agree that the time between now and the 2012 elections is an eternity in political terms.

Also, you may be correct with respect to your second paragraph. I have believed that the twin pincers of the domestic economy and his failed Afghan War will seal Barack Obama’s political fate. With David Petraeus and other key members of our Afghan “team” leaving, the country seems doomed.

Another year or so of this nonsense and we will up to our ears in Egypts and Libyas.

I agree with that; and the political unrest in China is interesting, to say the least. I made brief mention of it in my comments that are immediately above yours, which are entitled, “China’s Jasmine Crackdown.”

While China may be embarking on new economic directions in its “12th Five-Year Plan,” I have never believed in centralized governmental planning since I studied the former Soviet Union’s multi-year plans in college, which proved ultimately to be an utter failure and fraud. China’s plans may not be a whole lot better, as evidence appears of Soviet-style deserted “ghost towns.”

Terrorists and other ‘financial enemies’ were likely responsible for the near collapse of the U.S. financial system in 2008, a new Pentagon report has concluded.

The 2009 report, Economic Warfare: Risks and Responses, said financial terrorism by Jihadists or countries such as China may have cost the global economy $50 trillion in a series of co-ordinated strikes against the U.S. economy.

In an astonishing conclusion, the report claims two unidentified traders deliberately devalued trillions of dollars’ worth of stocks at the height of the crisis.

The report also concludes that untraceable actors undertook a three-tiered attack beginning in 2007, and that ‘Phase III [of the attack] may be under way right now.’

‘In addition, these same actors have clearly demonstrated the means to carry out such an attack.

‘There is sufficient justification to question whether outside forces triggered, capitalised upon or magnified the economic difficulties of 2008.’

The report concluded that: ‘Without question, there were actors who had the motive to harm the U.S. economy.

The report was commissioned in early 2009 by the Pentagon’s Irregular Warfare Support Program—which prepares U.S. government and military agencies for emerging non-traditional threats.

. . .

Although never classified, sources indicated that the report emerged only after concerned Congressmen and Defence Department officials highlighted its existence to media sources.

. . .

The attacks, according to the report, were part of a three-phase strategy.

The first phase was the deliberate inflation of oil prices in 2007 that generated as much as $2 trillion of excess wealth for oil-producing nations. . . .

. . .

In the second phase, untraceable investors attacked financial institutions such as Bear Stearns and Lehman Brothers in a ‘bear raid’.

The term refers to a strategy where investors try to force the value of companies down through malicious rumours or complex financial trades that impact its stock price.

The report says that as the crisis began, ‘virtually overnight’ two relatively small brokers emerged to trade, ‘trillions of dollars worth of U.S. blue chip companies.’

Crucially, these as yet unidentified investors are currently the number one traders in, ‘all financial companies that collapsed or are now financially supported by the U.S. government’ . . . .

Attacks on banks, especially Lehman Brothers which collapsed in 2008, caused interbank lending to seize up and stock markets around the world to collapse.

The U.S. government then had to step in and bail the system out.

Following this, the ‘third phase’ has seen the massive U.S. public debt now threatening the primacy of the dollar as a global currency.

‘Such an event,’ the report says, ‘has already been discussed by finance ministers in major emerging market nations such as China and Russia as well as Iran and the Arab states.

‘In short, a bear raid against the U.S. financial system remains possible and may even be likely.’

The report also points to evidence by former U.S. Treasury Secretary Henry Paulson, who said in 2008 that the Russian government had made a ‘top-level approach’ to the Chinese, asking them to dump shares in American mortgage giants Freddie Mac and Fannie Mae—forcing both into insolvency.

The Chinese military, according to the report, ‘has been advocating the potential for an economic attack on the U.S. for 12 years or longer as evidenced by the publication of the book Unrestricted Warfare in 1999.’

There is no question whatsoever that China and “dictator-for-life” Putin’s Russia are America’s enemies. Anyone who ignores this fact, or is oblivious to it, is more than simply naïve. He or she is potentially traitorous. Among other things, according to a Wall Street Journal editorial, “China and Russia have the capability to launch an EMP weapon—and have let us know it.” As a result of such an attack, only 30 Million Americans might survive.

If the article is accurate as to the results of the report’s analysis, then it’s a waste from beginning to end of taxpayer resources.

“The first phase was the deliberate inflation of oil prices in 2007” How and by whom through what mechanism was the ‘deliberate’ inflation brought about? This is fevered conspiracy thinking. We inflicted Greenspan and Bernanke on ourselves.

If it makes you feel better, the Chinese are as avid followers of Keynes as Greenspan/Bernanke and are well along into screwing themselves over and for many of the same reasons.

“In the second phase, untraceable investors attacked financial institutions such as Bear Stearns and Lehman Brothers in a ‘bear raid’.”

There were many people who were well aware by that time that we were deep into a bubble that had to burst. That a couple of traders guessed the timing is not remarkable.

“Following this, the ‘third phase’ has seen the massive U.S. public debt now threatening the primacy of the dollar as a global currency.”

Again, this is something we are doing to ourselves. The Chinese have nothing to do with it.

After a debt fed asset bubble bursts, deleveraging is the first priority. Private citizens have been rightfully pursuing this. The Federal government should not have started replacing private debt with public. It is extremely counterproductive and will only prolong the downturn.

And as for dumping shares of Freddie and Fannie, if I were a Russian or a Chinese or for that matter an American investor I would have done the same thing.

The Chinese have been shifting their Treasury exposure from the long end – certain to get hammered – to the short end. This is just common sense.

First, those who venture close enough to the Somali coast to place themselves at risk should not expect the U.S. Navy to rescue them.

It has been suggested that a joint military effort be undertaken by all the countries whose ships have been attacked or are at risk. My understanding is that there are joint operations globally to defend critical shipping lanes. Indeed, even China has contributed military forces to those efforts.

Yes, it might be ironic if China were to unleash a crippling attack on the Somali pirates and their bases, and thereby earn the respect and admiration of people worldwide. However, the Somali pirates are like gnats: bothersome, but not really dangerous in terms of America’s global commitments.

Yes too, the recent killing of the four sailors went awry, as any hostage taking negotiations can do. I concur that the Somali thugs should be terminated.

Second, Helprin noted: “[W]e are in effect an island nation.” This is how most Americans view their country. Many have never flown on an airplane, nor ventured far from where they grew up; and it is surprising how many sophisticated, wealthy, educated Americans have never been to Europe, or out of the States, or to other parts of the world. Their views are insular, which is reflected in American policies and outlook.

I believe in our great country, and in the inherent wisdom of the American people, and my comments are not intended to disparage them one iota.

Third, I concur with Helprin that vital U.S. national security and economic interests demand a large blue-water fleet. He adds: “As China’s navy rises and ours declines, not that far in the future the trajectories will cross.” I concur with that conclusion too. Both China and “dictator-for-life” Putin’s Russia are our enemies, now and in the future.

Abdicating our more than half-century stabilizing role on the oceans, neglecting the military balance, and relinquishing a position we are fully capable of holding will bring tectonic realignments among nations—and ultimately more expense, bloodletting, and heartbreak than the most furious deficit hawk is capable of imagining. A technological nation with a GDP of $14 trillion can afford to build a fleet worthy of its past and sufficient to its future.

I agree; and the same thing is true of other vital military needs and expenditures. Tragically, at present, we have a naïve, anti-war, far-Left, “Hamlet on the Potomac”—or “Jimmy Carter-lite”—narcissistic president, who is a cowardly demagogue. He is determined to weaken our great nation at every turn; and he must not be reelected.

Fifth, it has been suggested that American military expenditures are equal to many times what the next countries combined are spending. Hence, the question arises: where is the money going?

There is no question that—like it or not—the United States must maintain its absolute superiority now and in the future. No nation must be in a position to ever challenge us. Our very survival depends on it.

As I told a friend recently, who had commented on a Pentagon report that China may have triggered our economic crash:

[T]he Pentagon does not make claims of this magnitude idly, or without great justification. This is not the way that the Pentagon works. It is very professional and thorough, probably the most outstanding agency in our government.

I spent two years working at the Pentagon in intelligence, and then I have worked on and with Capitol Hill for most of my legal career. During this time, I have had an opportunity to see many federal government agencies and programs in action; and I can honestly say that the Pentagon is the best by far. There is no agency or program that is even remotely close.

The people who work at the Pentagon and serve our military—both in uniform and as civilians—are totally dedicated and professional; and they have inspired enormous pride in me over the years. If you read any of my articles, you will realize that I do not spare my criticism of people and institutions; and I am not naïve. Some people might assert that I am cynical; I prefer to believe that I am an idealist, who is repulsed when I encounter something that is less than just or the best.

The Pentagon and our military are not perfect, but they are truly excellent. There are reasons why the Soviet Union collapsed and we are the only superpower in the world today. It did not just happen by chance.

This enormous power must be maintained and nourished. I will repeat—because it deserves emphasis again and again—our very survival depends on it. This is not a “Mary Poppins” world in which we live. There are countries and terrorist groups around the world that want to destroy our great nation, and kill all of us. This is a fact of life, period.

What follows are the comparative numbers relating to our military expenditures vis-à-vis those of other countries. There may be more recent numbers that are available publicly, but I have not seen them.

For better or worse, America protects the free world; we encourage those countries and people who yearn for democracy and freedom; we are winding down a very successful war in Iraq, which I questioned and opposed at the outset, but was impressed that George W. Bush’s “surge” worked and won that war; we are mired in the Afghan War, which Barack Obama does not seem to have the will or determination to win; and we have commitments that are essentially endless.

We have no allies that are capable of doing any “heavy lifting” today. The UK is “gutting” its military; NATO is a mere shell of what it once was; and we are it—with very heavy duties and responsibilities. After having worked in and with government for so many years, I believe government is a vast wasteland, most of which should be eliminated. The one exception would be the Pentagon and our brilliant and, yes, wonderful and awe-inspiring military forces.

. . .

Update:

The UK’s Daily Mail has reported:

The 14 alleged pirates accused of hijacking a U.S. yacht off the coast of Somalia appeared in court today looking ‘exhausted and confused’.

The men, 13 Somalis and one Yemeni, were indicted on piracy, kidnapping and firearms charges at the U.S. District Court for the Eastern District of Virginia, near the Norfolk naval base.

Two U.S. couples were killed on board their own yacht last month after Somali pirates took them hostage off the coast of Oman.

. . .

If convicted, the men could face life in prison—and U.S. Attorney Neil MacBride has not yet ruled out filing further charges.

According to the indictment, by a grand federal jury, at least three of the men shot and killed the four U.S. sailors without provocation. It says they were armed with AK-47s and rocket-propelled grenades.

. . .

U.S. special forces boarded the yacht. According to the military, all four hostages were found dead or dying.

U.S. Seals shot two bandits in the ensuing firefight and a further two were found dead on board.

Another 15 were taken into custody, but Mr MacBride today said the last suspect was not charged because he was only a child and was alleged to have had only limited involvement in the hijacking.

. . .

The four sailors who died in February are the first American hostages to have been killed by Somali pirates.

Thus, even though the four sailors apparently placed themselves at risk by venturing into dangerous waters, and they should not have expected the U.S. Navy to rescue them, nonetheless the Navy attempted to do so and is bringing their killers to justice. It is another example of our brilliant military at work.

Japan expressed concern over China’s planned double-digit rise in defense spending this year, highlighting trepidation in the region about China’s escalating military and economic might after a week of fresh Chinese territorial confrontations with Japan, South Korea and the Philippines.

. . .

The comments came after China announced plans early Friday to increase its defense budget by 13% this year and as the week’s clashes built on concerns that China will increasingly use its escalating military power to assert its territorial claims in the region

Such fears have prompted many of its neighbors to to shore up defense ties with the U.S. and beef up their own militaries, threatening to push Asia into a new arms race.

China expects to spend 601.1 billion yuan ($91.4 billion) on defense in 2011, up from 533.4 billion yuan last year, Li Zhaoxing, spokesman for the National People’s Congress, told a news conference ahead of the start of the legislature’s annual session on Saturday.

. . .

The headline figure does not, however, include key items such as arms imports and the program to develop a stealth fighter and an aircraft carrier, according to foreign military experts who estimate that China’s real defense spending is far higher.

. . .

On Wednesday, Japan scrambled fighter jets to chase off two Chinese military planes which it said flew within 34 miles of disputed islands in the East China Sea, which are known as Senkaku in Japan and as Diaoyu in China.

. . .

Relations between Asia’s two biggest economies plunged to their lowest point in years in September following collisions near the islands between two Japanese coast guard patrol boats and a Chinese fishing vessel.

In December, Japan, which in 2010 was surpassed by China as the world’s No. 2 economy, revised its national defense guidelines, which were drawn up during the Cold War, to shift focus away from Russia and toward the emerging threat from China.

China’s more forceful stance on territorial issues has also alarmed other countries in the region.

On Wednesday, the Philippines deployed two war planes to protect oil explorers who complained that they were being harassed by two Chinese patrol boats in a disputed area of the South China Sea.

The Philippine government demanded an explanation Friday for the incident at Reed Bank near the Spratly Islands, which are claimed by China, Brunei, Malaysia, Taiwan, Vietnam and the Philippines.

. . .

South Korea’s Coast Guard said Friday it seized two Chinese fishing boats and their crews on Thursday after they were found fishing illegally in South Korea’s Exclusive Economic Zone, 64 miles southwest of Keokrulbiyeol island in the west sea.

During the process, one South Korean policeman was hurt by a weapon wielded by Chinese fishermen, and one Chinese fisherman was shot in his leg, the coast guard said.

. . .

In January, China jolted the region with a test flight of a new stealth jet fighter, indicating that China is further along in using the advanced technology than previous Pentagon statements had suggested.

China is also developing an antiship ballistic missile that could threaten U.S. naval vessels in the Asia-Pacific region, where the U.S. has long been dominant.

These are potentially-dangerous developments, inter alia, because—as indicated in comments above these—it appears that China is on a collision course with America, militarily and economically. Also, there are reasons to believe that its civilian leaders do not control its military.

The global capital structure has been integrating at an accelerated pace since the end of the Cold War, and this has been particularly led by the integration of China and the US.

The recent asset/debt bubble that started to unravel in 06 – visibly in 08 – is far from finished. Both China and the US are taking actions that exacerbate the problems rather than encourage quicker healing and these actions will impact each other negatively.

Here’s a column by Andy Xie writing about the problem from the Chinese point of view.

The Chinese were able to achieve their phenomenal growth rates by seriously dangerous and horrendous exploitation of their ‘middle’ class and by our willingness to generate a huge consumer asset/debt bubble – something we have continued despite the downturn (via government borrowing/spending even as consumers retrench to repair their household balance sheets).

The downturn is far from over and far worse is yet to come that will be impacting both China and the US. The trigger will likely be higher interest/inflation rates. These effects will be felt long before either side can get a war started.

I concur except with respect to the issue of whether there will be “higher interest/inflation rates” in the United States, or serious deflation, or something in the middle: stagflation. The jury is still out; however, my guess is that there may be some inflation, albeit the likelihood of deflation is even greater. It is anyone’s guess though, unless one has a crystal ball.

Wars seem to be partly the outgrowth of severe economic problems, as you know. Among other things, they are a way for politicians of all stripes to refocus public attention on issues other than their own shortcomings (e.g., Obama’s attacks on Libya while he is “vacationing” in Rio).

Next, Xie’s article about China—which is entitled, “Rebalancing Cannot Wait,” and subtitled, “When a white collar worker who is successful by any standard cannot afford a home after ten years of working, something is very wrong with the market and the economy”—is a good one, and worth reading. However, as China’s workers are “hurting,” its list of billionaires is growing. As Xie points out:

China’s high tax burden is mainly on middle class white-collar workers. China’s high income groups don’t pay much tax at all. They can own businesses and expense their personal expenditures.

[W]ithout exports or consumption . . . , the investment boom is just a bubble. It could burst during stagflation, triggering a massive financial crisis.

I would like to see Americans boycott products from China, and effectively shut them out of U.S. markets. This would be especially necessary as China becomes more aggressive militarily. I do not “need” to buy anything from China, and I assume lots of other Americans might reach similar conclusions and decisions.

. . .

Also, as the full effect of the “Great Depression II” sinks in with America’s Middle Class during the balance of this decade, its members will become more and more angry.

While U.S. politicians and their counterparts in other countries have been trying to convince their electorates that they have the answers, they are simply holding out false hopes that real solutions are at hand; and Americans are apt to realize this as the elections of 2010 and 2012 approach.

. . .

America and other nations are in uncharted waters; and their politicians may face backlashes from disillusioned and angry constituents that are unprecedented in modern times.

We saw this already with the American mid-term elections last November, in which Obama and his Democrats were “decimated” politically. However, the inept Republicans made him “relevant” again during the lame-duck session of Congress that followed. If the GOP does not blow it again, Obama will not be reelected; and he may return to either Chicago or Hawaii no later than January of 2013, to lick his political wounds and write his memoirs, and work on his presidential library full time. It cannot happen fast enough. He is truly an “Obamination.”

The United States said Monday it is “deeply concerned” about the rising trend of disappearances and arrests of human rights activists in China after one of the country’s most famous artists was detained.

Ai Weiwei, 53, an avant-garde artist who helped design the futuristic Bird’s Nest stadium at the Beijing Olympics, has been missing since he was stopped Sunday while preparing to fly to Hong Kong. Police also raided his Beijing studio.

Dozens of Chinese lawyers and activists have vanished, been detained or held under house arrest since February when online calls for protests similar to the pro-democracy uprisings in the Middle East and North Africa started cropping up. At least three people have been indicted for subversion. No major public protests have taken place in China.

. . .

Ai is the son of one of China’s most famous modern poets. He was also blocked from leaving China in December on a flight to South Korea. That came shortly after he was invited to attend the Nobel Peace Prize ceremony in Oslo, Norway, honoring jailed Chinese dissident Liu Xiaobo.

China Is Likely To Be The First Country To Grow Old Before It Gets Rich

This is the conclusion of an article in the UK’s Economist, which is worth reading and states:

THE publication of preliminary data from China’s census last year shows that an extraordinary demographic transition is under way. The population is still massive, and larger than any other country’s, at 1.34 billion. But the population is growing slower than when it was last counted, in 2000, and ageing faster. China is still likely to be the first country to grow old before it gets rich.

Three decades of the one-child policy have seen the population growth rate and the total fertility rate (the number of children an average woman can expect to have in her lifetime) fall steadily.

. . .

Families in the countryside were allowed a second child if the first was a girl. Ethnic minorities were allowed more. More recently, couples who are both single children themselves have been allowed more than one child.

. . .

China’s work force will in a few years start declining, and the “dependency” ratio—the proportion of the population made up of the young and elderly—will start to climb. Already, the proportion of people aged over 60 has increased from 10.4% in 2000 to 13.3% now. Those under 16 now make up 16.6% of the total, down from 23% in 2000.

. . .

Even if the [one-child] policy were to be relaxed, China would still be scrambling to cope with the changing shape of its population. The census highlights the urgency of efforts to restructure the economy, away from a dependence on growth led by investment and labour-intensive manufacturing for export. But the aim—an economy more reliant on domestic consumption—is made harder to achieve by an ageing population, worried about its health and security in its dotage.

. . .

Nor will it be easy to correct the sex imbalance the one-child policy has exacerbated. The census estimates the number of boys born for every 100 girls at 118.6, up from 116.9 in 2000. This is the result of sex-selective abortion—female feticide on an extraordinary scale.

. . .

Two other comparisons testify to the wrenching social change China is experiencing. Just under half the population now lives in cities, compared with 36.1% in 2000. And the number of migrant workers has increased from 121m to 221.4m. One in six of China’s population is working away from their registered home.

China’s leaders often seem obsessed with the threat of unrest, and the necessity of stability. Looking at the bare statistics revealed by this census is not going to help them sleep any easier.

Osama bin Laden’s death is a victory for U.S. intelligence and the heroic American military, not for Barack Hussein Obama who has been “gutting” the U.S. military and plans more of the same—which is why Leon Panetta is going to the Pentagon. At best, Obama is a narcissistic demagogue who is weakening the security of the United States; and he must be impeached.

As former U.S. Attorney General Michael Mukasey warned in a Wall Street Journal article, the killing of Osama bin Laden was a great victory for the U.S. intelligence community, but it may well be the last one because of Obama’s refusal to use tough tactics such as waterboarding on terror suspects:

Seized along with bin Laden’s corpse was a trove of documents and electronic devices that should yield intelligence that could help us capture or kill other terrorists and further degrade the capabilities of those who remain at large.

But policies put in place by the [Obama administration] promise fewer such successes in the future. Those policies make it unlikely that we’ll be able to get information from those whose identities are disclosed by the material seized from bin Laden. The administration also hounds our intelligence gatherers in ways that can only demoralize them.

Consider how the intelligence that led to bin Laden came to hand. It began with a disclosure from Khalid Sheikh Mohammed (KSM), who broke like a dam under the pressure of harsh interrogation techniques that included waterboarding. He loosed a torrent of information—including eventually the nickname of a trusted courier of bin Laden.

That regimen of harsh interrogation was used on KSM after another detainee, Abu Zubaydeh, was subjected to the same techniques. When he broke, he said that he and other members of al Qaeda were obligated to resist only until they could no longer do so, at which point it became permissible for them to yield. “Do this for all the brothers,” he advised his interrogators.

Abu Zubaydeh was coerced into disclosing information that led to the capture of Ramzi bin al Shibh, another of the planners of 9/11. Bin al Shibh disclosed information that, when combined with what was learned from Abu Zubaydeh, helped lead to the capture of KSM and other senior terrorists and the disruption of follow-on plots aimed at both Europe and the United States.

Another of those gathered up later in this harvest, Abu Faraj al-Libi, also was subjected to certain of these harsh techniques and disclosed further details about bin Laden’s couriers that helped in last weekend’s achievement.

The harsh techniques themselves were used selectively against only a small number of hard-core prisoners who successfully resisted other forms of interrogation, and then only with the explicit authorization of the director of the CIA. Of the thousands of unlawful combatants captured by the U.S., fewer than 100 were detained and questioned in the CIA program. Of those, fewer than one-third were subjected to any of these techniques.

Former CIA Director Michael Hayden has said that, as late as 2006, even with the growing success of other intelligence tools, fully half of the government’s knowledge about the structure and activities of al Qaeda came from those interrogations. The Bush administration put these techniques in place only after rigorous analysis by the Justice Department, which concluded that they were lawful.

. . .

The current president ran for election on the promise to do away with them even before he became aware, if he ever did, of what they were. Days after taking office he directed that the CIA interrogation program be done away with entirely, and that interrogation be limited to the techniques set forth in the Army Field Manual, a document designed for use by even the least experienced troops. It’s available on the Internet and used by terrorists as a training manual for resisting interrogation.

In April 2009, the administration made public the previously classified Justice Department memoranda analyzing the harsh techniques, thereby disclosing them to our enemies and assuring that they could never be used effectively again. Meanwhile, the administration announced its intentions to replace the CIA interrogation program with one administered by the FBI. In December 2009, Omar Faruq Abdulmutallab was caught in an airplane over Detroit trying to detonate a bomb concealed in his underwear. He was warned after apprehension of his Miranda rights, and it was later disclosed that no one had yet gotten around to implementing the new program.

Yet the Justice Department, revealing its priorities, had gotten around to reopening investigations into the conduct of a half-dozen CIA employees alleged to have used undue force against suspected terrorists. I say “reopening” advisedly because those investigations had all been formally closed by the end of 2007, with detailed memoranda prepared by career Justice Department prosecutors explaining why no charges were warranted. Attorney General Eric Holder conceded that he had ordered the investigations reopened in September 2009 without reading those memoranda. The investigations have now dragged on for years with prosecutors chasing allegations down rabbit holes, with the CIA along with the rest of the intelligence community left demoralized.

. . .

We also need to put an end to the ongoing investigations of CIA operatives that continue to undermine intelligence community morale.

Also, in an important article entitled, “Pakistan: Cutting to the quick,” UPI Editor at Large Arnaud de Borchgrave states:

Following the U.S. invasion of Iraq in 2003, Libyan leader Moammar Gadhafi reckoned he would be next on Bush 43’s hit parade. So he quickly surrendered all his nuclear paraphernalia, still in unopened crates, to Britain’s MI6 and the CIA, an impulsive move he must rue today.

. . .

[In Pakistan,] China is waiting in the wings to step in to the breach.

Forty-four percent of Pakistanis can’t read a newspaper or write a simple letter in any language. It jumps to 90 percent of rural females in Baluchistan. Some 50 TV channels find it hard to distinguish between yellow journalism and straight news. And they are almost all anti-American.

Madrassas, or single-discipline Koranic schools, teach boys 6 through 16 to recite the entire Koran by heart—in Arabic. Ten years after 9/11 there are still some 12,000 madrassas that also teach youngsters that Pakistan’s real enemies are America, India and Israel. And in the past 10 years they have graduated almost 2 million young men unfit for decent jobs, easy to recruit for extremist causes and an endless supply of potential suicide bombers.

The government can’t afford to fund a proper network of state schools as over half the budget goes to the military.

. . .

Since 9/11, the United States has spent about $1 trillion on 17 intelligence agencies and the Defense Intelligence Agency. They have finally got their Most Wanted Terrorist. But this may generate more rather than less terrorism by al-Qaida and its “Associated Movements,” from Belgium to Bangladesh and from Spain to Somalia. Revenge is a great motivator.

Congress is prone to punish Pakistan for harboring bin Laden. This would be a grave geopolitical blunder. There is no solution in Afghanistan without Pakistan. And Pakistan says there is no solution without Taliban, which it can deliver by virtue of having originally created Taliban.

Pakistan also controls one of NATO’s two supply lines to Afghanistan.

Like bin Laden, Taliban leader Mullah Omar and his “Quetta Shura” organization are tucked away under the surveillance and protection of ISI’s Section S, most probably near Quetta in Baluchistan.

With Taliban about to launch its spring-summer-fall offensive in widely scattered parts of Afghanistan, it would behoove the Obama administration to cut to the quick and begin negotiations for the inevitable exit. Obama originally backed the Afghan campaign, now in its 10th year, because “that’s where al-Qaida is.”

A Taliban spokesman denied any relationship with al-Qaida. Mullah Omar was already highly critical of bin Laden 10 years ago. With 65 percent of Americans against the war, the danger now is what experts call “a mini Tet.”

It was the 1968 Tet offensive in Vietnam—simultaneous Communist attacks on 27 cities and towns—that hastened the final 1973 agreement to end the war.

In Afghanistan, simultaneous Taliban attacks on five or six widely scattered towns would see a NATO rush for the exit signs. Better to talk from a position of strength—with Pakistan preaching/ordering compromise to its Taliban proteges.

One “hostile government” that might get clues to sensitive U.S. military technology from what is left of the American helicopter that crashed at the bin Laden compound in Pakistan—if it has not done so already—is of course China, whose presence in Pakistan is considerable. Indeed, China would like nothing more than to fill the vacuum if, or rather when, the United States withdraws from Afghanistan.

One must never forget that China was on the spot almost immediately after the American F-117 Nighthawk was shot down over Serbia in 1999—and we failed to destroy the wreckage. Indeed, the Chinese gleaned some of their technological know-how from that crash; and there is evidence to support the fact that China’s new stealth aircraft is the result of reverse engineering gained from the crash.

History may repeat itself in Pakistan, as our enemy China seeks to leap frog American technological advances.

This is the conclusion reached by acclaimed Chinese author Xiaolu Guo, which is set forth in a UK Telegraph article that adds:

[T]he author of ‘A Concise Chinese-English Dictionary’, said: “For the last 20 years China thinks America as a model but is also the enemy.”

Talking about her experience of education in Beijing, Chinese-born Guo who now lives in London, revealed that anti-Americanism was still very strong and people were told to intensively study American work and texts . . . in order to know everything about the “enemy”.

“The mentality is if you want to be number one in the world, you need to become them [your enemy] first …you need to have the same capacity as the enemy.”

However, Guo was at pains to stress that the Chinese Government was extremely different to the country’s people.

Arnaud de Borchgrave, editor-at-large of The Washington Times and of United Press International—and a foreign policy “guru,” with respect to whom I have enormous admiration and respect—has another fine article that is worth reading and reflecting on, albeit I respectfully disagree with many of his conclusions. Its implications go directly to the future of the United States as the world’s only superpower and the greatest nation on the earth.

In it, he stated that “[t]he U.S. owes China $1.3 trillion.” So what? We can refuse to pay them.

Indeed, China is dependent on Americans’ consumer purchases. Hence, China is “in bed” with us. To bring down our economy is to bring down their economy. They have no choice except to ride along, God love ’em.

In a sense, our debt is “funny money.” It is like playing the game of “Monopoly,” as a kid, except that the U.S. is “too big to fail” and China’s economy is tied into ours. Is it a “zero-sum” game where only one party wins, or the game of “musical chairs” where only one person gets that last seat? Not at all. The global economy, at least with respect to China and the U.S., is too “integrated.” Yes, they might like to “screw” us, but they would end up screwing themselves too. Hence, it can be argued that they are “boxed in”—at least economically, if not militarily.

Next, de Borchgrave asserted:

Default [on America’s debt] would rock global markets. By comparison, the Great Depression would look like children losing their weekly allowance. And the rest of the world would begin to look to China as the next global supreme power.

It is not that easy, or straightforward. America cannot lose without China losing bigtime. If our economy comes to a halt, theirs will come to a screeching halt, with their population out of work and mass riots that even their vaulted security apparatus and military might not be able to put down. Then, the “Arab Spring” or the “Scent of Jasmine,” which they have quelled so far, will come to China with a resounding thud.

With the SEAL raid that killed Osama bin Laden in his secret lair a short walk from Pakistan’s prestigious military academy, we have dramatic evidence that small-scale operations can be more effective for changing the course of history than multidivision invasions that inadvertently hand victory to our enemies.

It is highly unlikely that the death of bin Laden “changed the course of history,” or anything close. However, Barack Obama, being the raving narcissist and demagogue that he is, is milking this one completely and will continue to do so. Our heroic intelligence and military personnel pulled it off. Apparently they knew of bin Laden’s whereabouts for quite a while; however, our “Hamlet on the Potomac,” Obama, “dithered” and could not make a decision.

Also, while this was a “small-scale operation,” we need our overwhelming military forces to protect us and our allies, and project American power and might around the world. Make no mistake about it. Among other things, it prevents wars and keeps us safe at home.

De Borchgrave stated:

The $1 trillion we blew on Iraq killed Saddam Hussein, but it was a pyrrhic victory that enhanced Iran’s power and influence in Iraq.

Prior to the commencement of that war, I argued against launching it, inter alia, because I believed that Saddam Hussein had weapons of mass destruction (or “WMDs”)—which he would not hesitate to use against our military forces, and they might be at risk.

Having embarked on the war, however, David Petraeus’ “surge”—which George W. Bush approved, despite opposition from the Pentagon—proved to be brilliant and very successful. Whether Iraq can hold on to its fragile democracy remains to be seen. But we should not withdraw from the country despite Prime Minister Nouri al-Maliki’s lack of support with respect to this issue. Also, like George H.W. Bush did with respect to the Gulf War (e.g., getting monies from the Saudis and Kuwaitis), we should be receiving Iraqi oil revenues to compensate us for the human and financial costs of the war.

De Borchgrave added:

The U.S. can no longer afford a global military strategy and a defense budget that is almost as large as those of the rest of the world combined.

Obama has increased our budget deficit dramatically; and it was totally foreseeable that he would use that as an excuse to slash our military. Without our military and economic strength, we will be in deep trouble. Secretary of Defense Robert Gates said it best—which is quoted in the Wall Street Journal:

Mr. Gates knows well that America won’t balance its budget by squeezing the Pentagon. “If you cut the defense budget by 10%, which would be catastrophic in terms of force structure, that’s $55 billion out of a $1.4 trillion deficit,” he told the Journal’s CEO Council conference last November. “We are not the problem.”

It is arguable that Barack Obama is destroying the U.S., and that he must be removed from office ASAP, no later than January of 2013. Yes, I know that many Americans may take umbrage at this statement, but the man is a disaster in terms of the future of our great country. He is far worse than Jimmy Carter. At least Carter was a “misguided” patriot, who had gone to Annapolis and served in our military.

Next, de Borchgrave asserted:

[C]onservative think-tank experts are calling for a larger defense budget in order to keep the U.S. dominant on land, sea and air.

I agree with them. In the past, de Borchgrave has catalogued the threat from China alone. The U.S. military must not be weakened one iota; and in fact, it must be strengthened. We have to rebuild after two wars.

De Borchgrave contended:

Carrier-borne F-18 Super Hornets could have reduced Osama bin Laden’s Abbottabad house and compound to dust, but that would have destroyed all the intelligence.

The holy grail of defense spending is not as holy as it was before Abbottabad.

The “treasure trove” of intelligence was welcomed and valuable, and bin Laden’s death was a “symbolic” victory, but all of this is a mere drop of water in the vast oceans when compared with China and other enemies around the world that seek to destroy the United States and our allies. Bin Laden’s death cannot be used as an excuse to cut any military expenditures. However, the consummate demagogue Obama is trying to do it. Leon Panetta is not being sent to the Pentagon as our next Secretary of Defense to preside over a military “build up.” Hopefully both he and Obama are on their way out of office no later than January of 2013.

De Borchgrave observed:

Outspending and out-arming the Soviet Union worked at a time when the Soviet empire was on the verge of internal economic collapse. The “American Century” was the politico-military-economic miracle of the 20th century.

This is true today thanks in large part to Ronald Reagan, whom the Democrats hated and tried to destroy politically. Now he is “deified,” and they do not dare open their mouths. However, they tried to bring down his presidency, inter alia, with the so-called “Iran-Contra scandal.” And yes, like Reagan, I was once a Democrat, but never again—to the best of my belief.

If America has lost some of its luster in the early 21st century, the loss is entirely self-inflicted.

“Self-inflicted” largely by Obama, who has increased our budget deficit dramatically and put us in an “either-or” posture (e.g., either debt reductions or defense). He and House Speaker Nancy Pelosi, and their Democrats, have come perilously close to bankrupting our great nation.

Next, de Borchgrave argued: “The Iraq war was an expensive mistake.” It was only an “expensive mistake” if the flame of democracy flickers and dies, after we have given it life.

De Borchgrave added:

The Afghan war was an ill-thought-through, expensive punitive expedition that dragged in 42 other nations and, thus far, has cost the hapless U.S. taxpayer almost half a trillion dollars—with still a few years to go before all the troops come home.

It is Barack Obama’s Vietnam—which was Lyndon Johnson’s war.

If de Borchgrave is correct that the Afghan War is futile, it will represent a human tragedy of staggering proportions, especially for Afghan women. I would not give a plug nickel for the lives of Afghan women if the Taliban return to power!

Delusions of grandeur, or whatever it was, kept us spending billions on weapons systems for the last war, not the cyber- and robotic conflicts of the future.

This is the “party line” from the “Kool-Aid” crowd, or far-Left, anti-war Democrats who occupy the White House and other seats of power in Washington, D.C. today, as well as the American media—and I am not suggesting that de Borchgrave is part of that group, nor has he become beguiled by it.

If we go to war with China or North Korea, for example, it will not be a “cyber- and robotic conflict.” If an EMP Attack can be mounted against us, we will not be able to defend against it with “pee shooters.” Yet, this is precisely the Obama-Biden view of the world, and the reason why their presidency must end, sooner rather than later. Our great country cannot go through another four years with them in charge; and yes, I am an Independent, not a Republican.

Next, de Borchgrave contended: “The F-35 will be the last manned fighter bomber built.”

I do not believe this at all. If we are in a shooting war with China or North Korea, for example, we will need fighter jets, bombers and drones. All of our drones in this world will not save us. To argue that they would do so is like arguing that American foot soldiers are obsolete, which is utter nonsense, and more left-wing, anti-war, Democratic “babble.”

De Borchgrave added:

And the Pentagon estimates the total cost of owning and operating the fleet of 2,500 F-35s at $1 trillion dollars over the estimated 50-year life span of the aircraft.

Fifty years is a long time. Neither de Borchgrave nor I will be here then, but hopefully many hundreds of millions of Americans will be. The 50-year argument is a total “red herring,” used by the Democrats to inflate the apparent costs and kill off the weapons systems.

Also, de Borchgrave stated:

The Air Force is training more drone operators than fighter and bomber pilots, a fundamental shift for the 62-year-old service.

I concur that U.S. drones are potentially excellent, but like the American foot soldier, they will never replace fighters and bombers, especially when it comes to possible wars with China and North Korea—or Russia if it ever challenges us again. We need to project America’s power, and drones do not achieve that. Indeed, a logical extension of de Borchgrave’s arguments is that America would do away with our carrier battle groups too, which is absurd.

He asserted as well:

There are now 7,000 drones of various types in the U.S. arsenal.

In Afghanistan, neither old nor new bells and whistles will prevent Taliban from coming back, albeit “reformed” with pledges to keep out bin Laden and his terrorist mob.

First, soldiers on the ground will prevent the Taliban—if enough are deployed, and if we have the will to win, which Obama does not.

Second, Taliban “pledges” in general, and those to treat women humanely, are utter nonsense. They are the equivalent of what happened in Vietnam after America departed, when an estimated million Vietnamese lost their lives.

Third, with the fall of Afghanistan, is Pakistan far behind?

Lastly, de Borchgrave asserted:

In fact, al Qaeda fighters took a powder during the battle of Tora Bora 10 years ago. And killing Afghan guerrillas was not why friends and allies originally signed on.

We have “fair weather” friends and allies. Indeed, our principal ally’s military, that of the UK, is getting “decimated” by its Prime Minister David Cameron, which is what Barack Obama and his Über-Leftists want to do to our great military.

The Chinese Communist Party And The Masses Have Drifted Apart, And The Party May Be In Danger Of A Confrontation With The Chinese People

These are conclusions set forth in an important Wall Street Journal article entitled, “Red Ghost Over China”—and subtitled, “Maoism makes a comeback as economic and political reform ebb”—which is worth reading. It states in pertinent part:

A Tsinghua University sociologist estimated that across China there were 180,000 large-scale protests last year.

Violence is also on the rise.

. . .

It is no longer controversial in ruling circles to acknowledge that the Chinese Communist Party and “the masses” have drifted apart. But there is no clear consensus on what to do about it. That has led to some speculation that there is a split within the Party, a development that could upset the planned leadership transition next year. But it’s probably more accurate to say that the Party is paralyzed by fear, with economic and political reform dead in the water.

Observers of the Party’s remarkable recovery after the 1989 Tiananmen Massacre have attributed it to the leadership’s ability to adapt to changing circumstances with creative policies. That ability is no longer in evidence. The current leadership is leaning heavily on two old standbys: crackdowns and propaganda. Both are favorites of the leftist wing of the Party, which explains why China is having a neo-Maoist moment.

The crackdown is effective, at least in the short term. China’s security apparatus doesn’t lack for resources, having grown to claim a larger share of the national budget than the military. The Party justifies this with the need to protect against “external hostile forces” that they blame for the unrest in Inner Mongolia and elsewhere. The anonymous Internet calls for a “Jasmine Revolution” have generated fears in Beijing that the people power movements in the Middle East will spark similar uprisings among discontented Chinese youth.

. . .

One problem with these responses is that they hamper the Party’s ability to listen, and the truth is that Chinese are increasingly independent-minded—and cynical. When Party Secretary Hu Jintao and Premier Wen Jiabao started their decade-long term in 2002, they put greater emphasis on the welfare of workers, but the abuse of citizens’ rights by local cadres has only worsened. In the past, faith in the Party and central government remained strong, prompting people . . . to petition higher officials. Now they are losing hope.

The other danger is that leftist thinkers are genuinely trying to turn the Party back toward Marxist ideology. A Maoist website recently ran pictures of leading reform advocates with nooses around their necks. A forum in Shanxi last week called free-market economist Mao Yushi a “traitor” for criticizing Mao’s legacy.

The writings of these true believers are alarming because they evidently have the ear and protection of some higher-ups. Wu Bangguo, the Party’s No. 2 man, recently gave a speech in which he attacked private property. Earlier this month, leader-in-waiting Xi Jinping gave graduates of the Central Party School the same message, telling them to use the classics of Marxism-Leninism-Maoism to resolve current problems.

The Party may yet regain its footing under new leadership next year. For now it seems increasingly adrift, and in danger of a confrontation with the Chinese people.

Is China’s “neo-Maoist moment” similar to the resurgence of Stalinism in Russia—and the “iron fist” of Stalin’s heir, dictator-for-life Vladimir Putin? Mao Tse-tung and Joseph Stalin were the most ruthless killers of their own people in the 20th Century, and perhaps in the entire history of mankind. Mao was directly responsible for an estimated 30-40 million deaths between 1958 and 1960, as a result of what his regime hailed as the “Great Leap Forward.” It is estimated that Stalin was responsible for the deaths of more than 30 million men, women and children—his own countrymen—including millions during the collectivization of the Soviet farms in the 1930s.

Thank you for your comment . . . whatever your real name is. I assume you are in China, working in its propaganda ministry or for its military, in part because you used a phony e-mail address, and my response to you was returned by Yahoo!

The Cold War never ended—it merely changed forms. China is every bit as much our enemy today as it was before. Your posting at this blog, and China’s Cyber-attack against Google’s Gmail, are perfect examples.

The same is true of “dictator-for-life” Putin’s Russia. However, Russia is closer to a Third World country than America’s rival, which it used to be—and it is essentially irrelevant today, although both the United States and China pay lip service to it.

This is the title of an important CNN article, which is worth reading. It states in pertinent part:

President Barack Obama’s overall approval rating has dropped below 50 percent as a growing number of Americans worry that the U.S. is likely to slip into another Great Depression within the next 12 months, according to a new national poll.

A CNN/Opinion Research Corporation poll released Wednesday also indicate[s] that the economy overall remains issue number one to voters, with other economic issues—unemployment, gas prices and the federal deficit—taking three of the remaining four spots in the top five.

. . .

Forty-eight percent say that another Great Depression is likely to occur in the next year—the highest that figure has ever reached. The survey also indicates that just under half live in a household where someone has lost a job or are worried that unemployment may hit them in the near future.

. . .

“The poll reminded respondents that during the Depression in the 1930s, roughly one in four workers were unemployed, banks failed, and millions of Americans were homeless or unable to feed their families,” says [CNN Polling Director Keating Holland]. “And even with that reminder, nearly half said that another depression was likely in the next 12 months. That’s not just economic pessimism—that’s economic fatalism.”

. . .

Not surprisingly, with that much economic angst, the economy is the number one issue, the only one that more than half of the public says will be extremely important to their vote for president next year. Nearly all issues that at least four in ten say will be extremely important to their vote are domestic issues. Terrorism also makes that list, but Afghanistan is fairly low and Libya is tied for dead last out of the 15 issues tested. Abortion and gay marriage also rank very low, indicating that 2012 may be an election that is shaped more by bread-and-butter issues than social and moral concerns.

Since before this blog began in December of 2009, I have maintained that the United States and other countries worldwide are in the mist of the “Great Depression II.” If anything, the empirical data and other similar findings set forth at this blog support that conclusion. It has been stated again and again that 20-40 years from now, economic historians will describe the end of the last decade and the current decade as an economic depression, not a recession, drawing parallels between this period and the Great Depression of the last century that did not end until the outset of World War II—or perhaps at the end of it.

Also, I have maintained that “green shoots”—or signs that things are improving—may appear from time to time, similar to what happened during the Great Depression, and hopes may rise. However, in all likelihood, they will be short-lived and dashed as the green shoots turn into “dead weeds,” and the economic tsunami continues to roll worldwide, bringing enormous suffering to millions of people. With respect to the housing sector alone, I have predicted that the “bottom” will not be reached for at least another five years; and that those who sit on the sidelines and wait patiently, with cash, will find bargains galore and be rewarded handsomely.

More and more observers are agreeing with what has been stated at this blog; namely, the Great Depression II is here to stay, at least through the balance of this decade, and the human suffering is and will continue to be unfathomable. As I stated in an article entitled, “Euphoria or the Obama Depression?” that was published by the McClatchy Newspapers and McClatchy-Tribune News Service on April 8, 2009:

America and other nations are in uncharted waters; and their politicians may face backlashes from disillusioned and angry constituents that are unprecedented in modern times. Also, the limits of godless secularism and paying homage to the false gods of materialism may become self-evident.

“The debts that are in this country are skyrocketing,” he said. “In the last three years the government has spent staggering amounts of money and the Federal Reserve is taking on staggering amounts of debt.

“When the problems arise next time…what are they going to do? They can’t quadruple the debt again. They cannot print that much more money. It’s gonna be worse the next time around.”

. . .

He called Federal Reserve Chairman Ben Bernanke a “disaster” who has “never been right about anything” since he’s been in Washington. “I hope he doesn’t come back with QE3 but that’s all he knows. The only thing he knows is to print money.”

He predicted that after the Fed ends its quantitative easing program, known as QE2, this month, it may come back under another name.

“They’re gonna bring it back because [Bernanke will] be terrified and Washington will be terrified,” he said. “There’s an election coming in November 2012. Washington’s gonna print more money.”

It’s official: The housing crisis that began in 2006 and has recently entered a double dip is now worse than the Great Depression.

Prices have fallen some 33 percent since the market began its collapse, greater than the 31 percent fall that began in the late 1920s and culminated in the early 1930s, according to Case-Shiller data.

. . .

“The sharp fall in house prices in the first quarter provided further confirmation that this housing crash has been larger and faster than the one during the Great Depression,” Paul Dales, senior economist at Capital Economics in Toronto, wrote in research for clients.

. . .

Prices continue to tumble despite affordability, which by most conventional metrics is near historic highs.

The rate for a 30-year conventional mortgage is around 4.5 percent, just above the historic low of 4.2 percent in October 2010.

. . .

Yet other factors are constraining the market.

After the fallout from the subprime debacle, in which millions lost their homes when they defaulted on loans they could not afford, banks changed underwriting standards.

More than four in every five mortgages now require a down payment of 20 percent, and credit history standards have tightened. At the same time, foreclosures continue at a brisk pace, pushing more supply onto the market and pressuring prices downward.

Then there is the issue of underwater homeowners—those who owe more than their house is worth—representing another 23 percent of homeowners who cannot leave or are in danger of mortgage default.

Indeed, the foreclosure problem is unlikely to get any better with 4.5 million households either three payments late or in foreclosure proceedings. The historical average is 1 million, according to Dales’ research.

In another important Wall Street Journal article entitled, “The Great Property Bubble of China May Be Popping,” it has been reported:

After years of housing prices gone wild, China’s property bubble is starting to deflate.

Residential prices are heading downward in some major cities, damping some undesired real-estate speculation but raising the prospect that the Chinese economy may slow more rapidly than anticipated with profound consequences for global growth.

Real estate is a foundation of China’s phenomenal growth record in the past two decades, and its health is crucial to China’s construction, steel and cement sectors. Real estate is also a favored investment of Chinese looking to get better returns than bank deposits pay. Local municipalities and provinces depend on rising prices for land sales as well to fund infrastructure projects.

World Bank economists warned at a Beijing press briefing on Wednesday that a real-estate bubble was among the biggest economic risks China faces.

. . .

A downturn in property and apartment prices would harm Chinese industry and investment, and crimp consumer spending. China is a “housing-led economy,” says UBS economist Jonathan Anderson, who estimates that property construction alone accounted for 13% of gross domestic product in 2010, twice the share of the 1990s.

While China’s anticipated growth is still well above that of other large economies, any reduction could have deep consequences. The global economy is now even more dependent on China for demand for anything from commodities to luxury goods, given the tepid recovery in the U.S. and Europe’s continuing sovereign-debt problems.

If the Chinese housing market slows faster than people had expected, the impact would be felt in a number of markets that export heavily to China. Many Latin American and African economies have shifted their focus toward Chinese demand for their raw materials, and many Western firms, including U.S. retailers and fast-food chains, now bank on Chinese consumers feeling wealthier to make up for stagnating sales elsewhere. Also, plans by local Chinese governments to improve infrastructure loom large for heavy-equipment makers like Caterpillar Inc.

. . .

A number of analysts think official data, which have continued to show a slight rise in prices, understate the slowdown as the government can affect the numbers by pressing developers to withhold or add high-value properties to the market depending on what it wants the data to show.

. . .

Chinese officials, facing widespread anger from ordinary citizens who can no longer afford to buy a home, have sought to slow the rise in housing prices.

. . .

Since January 2010, the Chinese government has introduced a number of measures to stem speculation, including boosting down-payment requirements on mortgages for second homes to 60% from 40%, barring state-owned enterprises outside the real-estate sector from investing in property and lifting the amount of cash banks must hold in reserve 11 times—essentially reducing funds banks can lend.

. . .

In Shanghai, apartment sales tumbled 37% in April, to 11,000 units, compared with 17,500 units in January, according to the Shanghai Real Estate Trading Center. With business so slack, Midland Realty, a unit of Hong Kong-based Midland Holdings Ltd., closed eight of its nine offices in Shanghai. “The government’s policy on purchase restrictions had a huge impact on both selling and buying, leading to transactions drying up,” said Xu Feng, senior director of Midland’s development center in Shenzhen.

In an article entitled, “Medvedev hints he and Putin won’t be 2012 rivals,” Reuters has reported:

Russian President Dmitry Medvedev dismissed talk of a deepening rift with Prime Minister Vladimir Putin in remarks published Monday, strongly hinting they would not run against each other for president next year.

In a Financial Times interview, he also said he hoped Barack Obama, who has helped improve Russian-U.S. ties, would win a new term as U.S. president next year.

. . .

Many analysts . . . believe it is Putin who will decide whether to return to the country’s top job or endorse his protégé for a second term. With a marginalized opposition, either one would be likely to win.

. . .

Medvedev sounded far less equivocal about the U.S. election in November 2012, praising Obama and accusing some of his opponents of turning Russia into a scapegoat.

“There are representatives of a very conservative wing who are trying to resolve their political tasks in part by whipping up passions about Russia,” he said.

He suggested a Republican victory could chill ties after a period that included the signing of a new nuclear arms reduction pact and U.S. support for Russia’s bid to join the World Trade Organization.

“I would like Barack Obama to be elected to the office of president of the United States a second time,” he said.

It is not surprising that his lapdog, Medvedev, will not oppose Russia’s “Hitler,” Putin, in perpetuating his brutal de facto dictatorship. Hitler’s henchmen and those of Stalin did not oppose them either.

Similarly, it is not surprising that they would endorse and embrace Barack Obama, who was responsible for giving them the New START Treaty. George W. Bush withdrew from the ABM Treaty, which had expressly prevented major advances in missile defense. The next GOP administration must withdraw from the New START Treaty as soon as it comes to power.

In important testimony before Congress, former world chess champion and chairman of the United Civil Front—a pro-democracy group—and co-chair of the Russian Solidarity Movement, Garry Kasparov stated:

After I left the sport, I joined the pro-democracy movement in my country, motivated by the disturbing course change away from freedom that Russia was undergoing under President Vladimir Putin. I could not accept that my own children would grow up in a totalitarian state as I had. And to those who have suggested that I should leave Russia for my family’s convenience and safety, I say that it is my country, one I proudly represented around the world for decades, and so let the KGB leave, not me.

. . .

More recently, I traveled across almost all of Russia to talk to and listen to my countrymen, which is the only way for most Russians to hear from a critic of the Putin regime, since we are banned from the mass media. My colleagues and I are dedicated to bringing individual freedom and the rule of law to Russia, and we know very well by now that this cannot happen as long as Putin is in power. We protest in the streets, we provide legal defense for those who are punished for standing up to the regime, and we try to let Russians know that they are not helpless and that they are not alone.

When the Berlin Wall fell and the Soviet Union collapsed, we on the other side of the Wall felt far more hope than you can imagine. Yes, there was fear and confusion as well, but thanks to the courage of Ronald Reagan, Margaret Thatcher, and others who followed them, hundreds of millions of people had the opportunity to grasp the freedom that the western world takes for granted. It was a great moment in world history and those leaders who did not forget about us will in turn never be forgotten by us.

For those who do not follow events in Russia, that is often where the story ends. Communism was proved bankrupt, the Cold War ended, and Russia joined the free world. Unfortunately, that last item on the agenda was never quite completed. Russia under Boris Yeltsin quickly acquired many of the mechanisms of democracy and freedom, but the values and traditions that support them never had a chance to put down roots. Economic chaos, rampant corruption, and widespread violence left many Russians with the impression that these were the fruits of democracy. When former KGB lieutenant-colonel Vladimir Putin took control of the country in 2000, he and his cronies were very quick to exploit that impression, just as the Communists had done in the previous election against Yeltsin.

By the way, I refer to Russia’s state security apparatus as the KGB for the expediency of this more widely recognized acronym. Its name has been changed many times over the decades, but calling it the FSB, its current name, does not change its nature. I admit that I had some hopes that the rampant corruption of the last Yeltsin years would be reined in by this unknown but efficient KGB man Putin. I could have never imagined that in just a few years, a bust of Felix Dzerzhinsky, forefather of the KGB, that had been torn down by jubilant crowds over a decade earlier, would soon find its way back to the plaza, both figuratively and literally.

The new regime quickly began the process of dismantling the fragile new institutions of honest elections and a free media. Rivals and dissenters were purged from the political and business realms, power was tightly centralized in the executive, and the flow of federal money from the wealthy center to the rest of the country was reversed, creating what most resembles a feudal oligarchy. The Putin regime also contains elements of Mussolini’s corporate fascism, with giant private monopolies working together with the state. It’s really a combination of Adam Smith and Karl Marx. The expenses are nationalized while profits are privatized.

One of the most common, and most ignorant, commentaries we of the opposition hear about the situation in Russia today is that we should be grateful, because things are better now than they were in the USSR. This is damning with very faint praise! Why go back to the 1970s to make comparisons? What about 1991? Or 1998? We had many problems then, yes, but we also had far more liberty and the potential to stay on a course to join the free world. Putin took that from us. We are also often told that Russians want a strong hand, a Tsar, and do not really want democracy. I reject completely this notion of a mysterious genetic tendency. Consider China and Taiwan, East and West Germany, and the two Koreas.

Putin’s economic miracle is another common myth. If you look at the numbers, the real economy was ready to boom in 2000 even with oil prices in the teens. Russia was recovering from the 1998 default and market reforms were taking effect despite the high corruption level. And yet now, even with oil back near $100, the outlook is still poor. The country is falling apart as the oligarchs steal the money faster than it can be pumped out of the ground. We are quickly becoming a resource-dependent petro-dictatorship. Putin and his gang are not Communists, or nationalists, or anything else. There is no ideology, only power and money.

But we have elections, yes, we do have elections. We go through the motions of voting and put on a show of campaigning and counting, all as if it really mattered—even though we all know it is all only for show. Putin is so secure in his power he did even bother changing the constitution to take another term. He simply put his shadow, Medvedev, in his chair temporarily, and continued business as usual. America and the rest of the free world prefer to go along with the charade, to allow Russia a place in the G-8 as if Russia were a real democracy. To those who say that Putin is popular, and that fake elections and suppression of dissent are irrelevant, I ask them, “how do you know?” Would you trust opinion polls in a police state? If he is so popular, why jail opposition activists, why blacklist so many rivals and so many topics from the media?

As for Medvedev, he is bait for a trap. For more than three years now, first as Putin’s hand-picked “candidate” and now as president, he has been making statements that give credulous Russians and willingly duped foreign officials false hope that he will lead a liberalization movement against Putin. But how can a man be in conflict with his shadow? For all his talk, Medvedev has done nothing to ease the oppression while doing much to make it worse. Laws have been passed that broadly define opposition members as extremists, even terrorists, and the list of political prisoners continues to grow longer. In theory, Dmitri Medvedev can create the Medvedev Era with one stroke of his pen, by signing an order to relieve Vladimir Putin from his post as prime minister. But as the popular joke in Russia goes, “There are two parties in Russia today. The Putin party and the Medvedev party. The problem is Medvedev doesn’t know which one he belongs to.”

A cynic may ask, “why does it matter to us if Russians do not have freedom of speech? We have enough problems now, why take a stand?” For decades, America led the fight to contain the spread of Communism. Not only because it threatened American interests, but because every president understood that being America meant standing up for American ideals worldwide. The USSR was not just a threat, it was, in Reagan’s typically blunt term, the evil empire, to be resisted on moral grounds. Its people were victims to be aided, not enemies to be destroyed.

When the wall fell, the free world celebrated and in so doing, let down its guard. Just as all the professional analysts were surprised by the collapse of the USSR, it seems today few are willing to admit Russia has slipped back into darkness. This is a terrible mistake, as the spread of the corruption of Putin’s corporate state is a serious threat to freedom worldwide. It only imitates capitalism, while in reality it is a state-run machine for looting national resources in Russia and the shareholders of companies abroad. Corruption, not oil or gas, has become Russia’s biggest export. The western appeasement crowd that keeps calling for engagement that will eventually transform Russia cannot see that it is the West, not Russia, that is being transformed by this contact.

Drawn by the lure of big profits, western presidents, prime ministers, and corporations have lined up to sacrifice their professed ideals in order to do business completely on the Kremlin’s terms. Transparency International ranks Russia as 154th of the 178 nations on their corruption index. On their list of the world’s twenty-two largest exporting nations, Russia scores by far the worst in evaluating its corporations’ readiness to pay bribes while doing business abroad. After over a decade of Putin and increasing economic engagement with the rest of the world, Russia’s rankings have gotten worse, not better. The neighboring nations most closely allied with Putin’s government have also dropped steadily in the corruption rankings. The problem inside Russia has become epidemic. According to estimates made by the leading Russian expert in corruption, Georgyi Satarov, the overall amount of bribes in the Russian economy skyrocketed from $33 billion to more than $400 billion per year during Putin’s rule.

Putin is also not above the old-fashioned use of force, as he demonstrated by invading neighboring Georgia and annexing its sovereign territory. Which, by the way, is still occupied by military force and where Putin continues to make threats. Kremlin provocations inside Georgia continue via a series of terrorist bombings that have been strongly linked to Russian intelligence officers operating from the annexed territory of Abkhazia. An official list of these state-sponsored terror attacks issued by the Georgian government is attached to my submitted testimony. The Kremlin has had no qualms blackmailing its neighbors and Europe over natural gas, at one point cutting supplies and causing shortages to half of the European Union during winter. Always looking for new sources of cash, the Kremlin continues to supply military and nuclear technology to belligerent states like Iran, Syria, and Venezuela. It is often said that the US needs Russia’s help in various regions, but it has been clear many times that the Kremlin’s only interest is self interest. Putin is delighted to help the United States stay stuck in Afghanistan and to stir up conflict in the region, as any incident drives up the price of oil, the money from which keeps the oligarchs in power.

. . .

Putin’s closest allies, those who keep him in power, are not faceless gray Politburo members who aspire to nothing more than a nice house or car. Putin’s oligarchs own global companies, buy real estate in London, Biarritz, New York City. The money they have pilfered from Russia’s treasury goes to buy art, yachts, and American and British sports teams. In short, they wish to enjoy the spoils and this makes them vulnerable. Putin needs the West’s support because that is where they all keep their money.

They are vulnerable to limitations on banking, acquisitions and travel, leading to what I call the “Do not Fly, Do not Buy List.” Even the suggestion that their investments abroad might be investigated would cause shockwaves in the Kremlin power structure. So many of their assets come from shady deals and looted properties that if the West ceases to rubber-stamp their money-laundering operations they will cease to treat Putin as the all-powerful guarantor of their wealth. As the famous Washington saying goes, follow the money and you will get results.

This treatment of denying visas and investigating investments must not be reserved for Putin’s wealthy supporters. The entire Kremlin power structure, especially the judiciary, is made up of loyalists with no regard for the rule of law. Those who violate their oaths and betray the laws they should be upholding should not be granted immunity by the civilized world. The police and prosecutors who fabricate evidence, the judges who rubber-stamp the convictions, the officials who rig the elections, they can and must be held accountable. They are following orders from above, yes, but just because they will not pay for their crimes in Russia does not mean they should be treated as decent citizens when they leave the protection of the KGB police state.

. . .

The creation of a new police state in Russia is not an anonymous, blameless crime. I have included with my submitted testimony lists we have compiled of the officials involved in numerous grave violations of Russian law and Russia’s international commitments. There are many precedents for taking action against such individuals. The members and leaders of the Cosa Nostra, the Italian mafia, were above the law in their native Sicily. But many were refused entry to the United States due to their criminal connections. Those who whitewash the murders of journalists and opposition members and those who carry out the repression of Putin’s Russia should be treated with equal scorn by the civilized world. These are not warlords or soldiers, they are bureaucrats who side with power because they want the easy life. If their lives become less easy, you will be surprised at how quickly things can turn.

The final argument is that Russia is too strong, that its oil and gas reserves make the Kremlin too powerful and influential to resist. This is similar to the theory that the US cannot stand up to China on Tibet or anything else because China holds so much American debt. But the Chinese are not fools. They know that the day after America defaults, the Chinese economy would explode to the moon. It’s economic mutually assured destruction, and the same principle is in effect with Russian resources. Russia cannot cease selling oil and gas to the West, despite the occasional threat. The pipelines are in place, the contracts are written, and the entire Kremlin oligarchy depends on the high profit margins to stay in power. Without the cash surplus that comes with $100 per barrel oil, the hollow state of the Russian economy would quickly be revealed.

. . .

I look forward to the day when a strong, independent, and economically and culturally vibrant Russia takes its place among the leading nations of the world as an equal partner. This can only happen when our people are free to choose their leaders and free to achieve their dreams. Our problems are for us to solve; we do not beg for help. What we ask is that America and the other leading nations of the free world live up to their own traditions and rhetoric. End the hypocrisy of treating Putin’s regime like a democratic ally. Stop treating the oligarchs who plunder our nation like legitimate businessmen. Stop allowing the agents of a police state to travel without restrictions or shame.

When I was growing up in the Soviet Union, in Baku, Azerbaijan, we were told America was the enemy. But most of us understood that there must be something good there if the government was so keen on keeping it from us. Generations of American leaders faced down nuclear annihilation to fight for the rights of those behind the Iron Curtain. Surely the threat of Putin’s Russia is nothing in comparison. From the Marshall Plan to Jackson-Vanik, the United States has listened, spoken, and acted. There is no longer a wall that needs to be torn down, but courage is still necessary to protect our most sacred values. I thank you again for inviting me here today and I wish you all the courage to act.

Given that chess champions are rock stars in Russia, he could have settled into an easy life of celebrity there. Or he could have joined the opposition to Putin’s kleptocracy, as he has, but from a safe and comfortable apartment in London or Manhattan.

Instead, he has maintained a life in Russia, where—given the grisly fate met by many journalists and human rights advocates—he lives with bodyguards and anxiety.

He does not live without hope for Russia’s future, however. And to that end, he came to Washington (meeting with executive and congressional officials) with three essential messages:

First, the ostensible power struggle between Putin, now prime minister, and his hand-picked president, Dmitry Medvedev, is a sham. Putin pulls the strings. Americans, including the Obama administration, have been taken in by this shadow play, Kasparov says, which is useful for Putin—Medvedev gives the regime a friendlier face to the West—but essentially irrelevant.

Second, Putinism is not working, and therefore its continuation is not inevitable. Despite being an oil exporter at a time of sky-high oil prices, Russia’s economy is ailing. Capital is fleeing, infrastructure is decaying, and people are noticing.

. . .

And having quarantined Russia from democracy movements that flared in Ukraine, Georgia and Kyrgyzstan, Putin now has to worry about infection from the Arab Spring. “Putin did everything to prevent an Orange Revolution, but now comes the ghost of Tahrir Square,” Kasparov said.

Finally, the United States has at its disposal a practical tool that could help undermine Putin’s hold on power—specifically, a bill sponsored by Maryland Democratic Sen. Ben Cardin that would ban visas for and freeze assets of Russian officials implicated in rank abuses of justice or abrogations of freedom inside Russia.

“To outsiders, this may not seem like much,” Kasparov said. But it would undermine what Kasparov sees as the fundamental principle and purpose of Putin’s regime: that officials who are loyal to Putin can accumulate assets and park them abroad—and that Putin can protect them.

“If you are loyal to the boss, to the capo di tutti capi, you are safe, inside Russia and out—in Dubai, London, Lake Geneva,” Kasparov said. “If something happens to even a small group of these people, it will cause a dent in the monolith of power.”

Putin has bought off and corrupted so many European officials that Europe will not act first, Kasparov said. But the United States could—and because Russian oligarchs increasingly are investing in the United States, U.S. action would make a big difference.

The KGB lieutenant-colonel who became Russia’s ruler, Putin, must be tried, convicted for his many crimes globally, and terminated. His lackey, Medvedev, is also complicit; and he too must be tried, convicted and imprisoned, at the very least.

The West’s goal must be to bring down a Russia increasingly focused on domination and replace it with a democratic nation that lives at peace with the world—and this is true with respect to China as well.

In a fine article about China that is worth reading entitled, “Chinese Party Marks Nine Decades,” the Wall Street Journal discusses what 90 years of communism has brought to the Chinese people and the world, and what the future may hold. It states in pertinent part the following:

Eager to bolster its legitimacy in the eyes of an increasingly restive and Internet-savvy society, China’s Communist Party is marking its 90th anniversary Friday with a no-holds-barred campaign to reassert its airbrushed version of modern history.

For a Chinese leadership spooked by uprisings in the Arab world, the campaign is designed to hammer home the message that only the party could have engineered China’s emergence as the world’s second-largest economy, and only the party can keep raising living standards, while maintaining social stability.

But for its critics[,] its heavy-handed efforts are only highlighting the party’s failure to evolve politically and to come to terms with its own past, especially the 1958-61 Great Leap Forward—when millions starved to death in a push to jump-start industrialization—and the chaos of the 1966-76 Cultural Revolution.

What the Journal’s article fails to emphasize is that China’s ruthless dictator Mao Tse-tung was directly responsible for an estimated 30-40 million deaths between 1958 and 1960, as a result of what his regime hailed as the “Great Leap Forward.” Like the Soviet Union’s equally-brutal dictator, Joseph Stalin, Mao’s crimes involved Chinese peasants, many of whom died of hunger from man-made famines under collectivist orders that stripped them of all private possessions.

Approximately 70 years have passed since this human tragedy of epic proportions occurred in the Soviet Union. Approximately 50 years have passed since the comparable tragedy occurred in China. It is time for the world to pay tribute to more than 60 million people who perished under Stalin and Mao.

While the precise numbers of the victims may never been known, each of us has a duty to honor their memories and take steps to insure that holocausts do not occur anywhere again. These victims are forgotten today, seemingly having disappeared without a trace and having been swallowed up by history, as if they never existed. This compounds the crime against humanity.

Just think of the contributions that the offspring of those who perished might have made to this world, whose numbers might be in the hundreds of millions today.

The domestic security apparatus, meanwhile, has been using increasingly arbitrary and extrajudicial methods to silence the party’s most prominent critics, including China’s most famous contemporary artist Ai Weiwei, even after many of them have been released from custody.

On Wednesday, Beijing police visited the home of Mao Yushi, an 83-year-old liberal economist who isn’t related to Chairman [Mao Tse-tung] and has been highly critical of his policies, as well as of an increasingly vocal campaign to rehabilitate his memory in the last few months.

The police told him he had to cancel a planned interview with the Voice of America that evening and was no longer permitted to give interviews about the founder of Communist China, Prof. Mao said.

“I was very surprised—I’ve never experienced anything like this in recent times,” said Prof. Mao, who has also received threatening telephone calls and emails since Maoist revivalist websites launched a campaign to have him prosecuted for criticizing Chairman Mao in a recent book review. “The government’s aim is to emphasize the legitimacy of the party—that is their purpose—so they are avoiding talking about the party’s mistakes.”

Like many Chinese of his generation, he said he personally suffered under Chairman Mao, almost dying of hunger during the Great Leap Forward, when he estimated that 80 or more people in his village of 700 starved to death.

He and other liberal Chinese have long hoped the party will edge toward reassessing its past, especially as a new generation of leaders, many of whom were forced to work in the countryside during the Cultural Revolution, prepares to take power next year.

Instead, the party appears to be moving in the opposite direction, growing increasingly reluctant to acknowledge publicly even the mistakes it has admitted in the past.

. . .

Earlier accounts had admitted, for example, that the population dropped 10 million in 1960, but hadn’t given an overall death toll for the Great Leap Forward, which some historians put as high as 30 million-45 million.

China is America’s enemy; and the United States’ and the West’s goal must be to bring down a China increasingly focused on domination, and replace it with a democratic nation that lives at peace with the world. The Chinese people have been oppressed and intimidated long enough, and they deserve nothing less. The same is true of the Russian people, who live under Putin’s barbarous regime—in a country where Stalin’s memory is being rehabilitated as well.

This is the title of an important Wall Street Journal article by Professor Walter Russell Mead—subtitled, “This century will throw challenges at everyone[, but the] U.S. is better positioned to adapt than China, Europe or the Arab world”—which states in pertinent part the following:

It is, the pundits keep telling us, a time of American decline, of a post-American world. The 21st century will belong to someone else. Crippled by debt at home, hammered by the aftermath of a financial crisis, bloodied by long wars in the Middle East, the American Atlas can no longer hold up the sky. Like Britain before us, America is headed into an assisted-living facility for retired global powers.

This fashionable chatter could not be more wrong. Sure, America has big problems. Trillions of dollars in national debt and uncounted trillions more in off-the-books liabilities will give anyone pause. Rising powers are also challenging the international order even as our key Cold War allies sink deeper into decline.

But what is unique about the United States is not our problems. Every major country in the world today faces extraordinary challenges—and the 21st century will throw more at us. Yet looking toward the tumultuous century ahead, no country is better positioned to take advantage of the opportunities or manage the dangers than the United States.

Geopolitically, the doomsayers tell us, China will soon challenge American leadership throughout the world. Perhaps. But to focus exclusively on China is to miss how U.S. interests intersect with Asian realities in ways that cement rather than challenge the U.S. position in world affairs.

. . .

In Asia today China is rising—but so is India, another emerging nuclear superpower with a population on course to pass China’s. Vietnam, South Korea, Taiwan, Indonesia and Australia are all vibrant, growing powers that have no intention of falling under China’s sway. Japan remains a formidable presence. . . . Asia today looks like an emerging multipolar region that no single country, however large and dynamic, can hope to control.

This fits American interests precisely. The U.S. has no interest in controlling Asia or in blocking economic prosperity that will benefit the entire Pacific basin, including our part of it. U.S. policy in Asia is not fighting the tide of China’s inexorable rise. Rather, our interests harmonize with the natural course of events. Life rarely moves smoothly and it is likely that Asia will see great political disturbances. But through it all, it appears that the U.S. will be swimming with, rather than against, the tides of history.

Around the world we have no other real rivals. Even the Europeans have stopped talking about a rising EU superpower. The specter of a clash of civilizations between the West and an Islamic world united behind fanatics . . . is less likely than ever. Russia’s demographic decline and poor economic prospects (not to mention its concerns about Islamic radicalism and a rising China) make it a poor prospect as a rival superpower.

When it comes to the world of ideas, the American agenda will also be the global agenda in the 21st century.

. . .

Fascism, like Franco, is still dead. Communism lingers on life support in Pyongyang[, North Korea,] and a handful of other redoubts but shows no signs of regaining the power it has lost since 1989 and the Soviet collapse. “Islamic” fanaticism failed in Iraq, can only cling to power by torture and repression in Iran, and has been marginalized (so far) in the Arab Spring. Nowhere have the fanatics been able to demonstrate that their approach can protect the dignity and enhance the prosperity of people better than liberal capitalism.

. . .

Closer to home, Hugo Chavez and his Axis of Anklebiters are descending towards farce. The economic success of Chile and Brazil cuts the ground out from under the “Bolivarean” caudillos. They may strut and prance on the stage, appear with Fidel on TV and draw a crowd by attacking the Yanquis, but the dream of uniting South America into a great anticapitalist, anti-U.S. bloc is as dead as Che Guevara.

So the geopolitics are favorable and the ideological climate is warming. But on a still-deeper level this is shaping up to be an even more American century than the last. The global game is moving towards America’s home court.

The great trend of this century is the accelerating and deepening wave of change sweeping through every element of human life.

. . .

This tsunami of change affects every society—and turbulent politics in so many countries make for a turbulent international environment.

. . .

This challenge will not go away. On the contrary: It has increased, and it will go on increasing through the rest of our time. The 19th century was more tumultuous than its predecessor; the 20th was more tumultuous still, and the 21st [century] will be the fastest, most exhilarating and most dangerous ride the world has ever seen.

Everybody is going to feel the stress, but the United States of America is better placed to surf this transformation than any other country. Change is our home field. It is who we are and what we do. Brazil may be the country of the future, but America is its hometown.

The only thing on the horizon that might dampen the American future that Professor Mead has described is a nation-ending EMP Attack, which might kill all except for 30 million Americans, and end any future that we might envision.

Query whether we are totally and absolutely protected against such an attack, or whether America’s “prince of darkness”—and its consummate narcissistic demagogue, “Hamlet on the Potomac” and “Jimmy Carter-lite”—Barack Obama, is weakening our great nation’s military strength in ways that will dramatically change the course of history?

In another important article entitled, “World power swings back to America”—and subtitled, “The American phoenix is slowly rising again. Within five years or so, the US will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labour gap with China in a clutch of key industries. The current account might even be in surplus”—the UK Telegraph‘s Ambrose Evans-Pritchard added:

Telegraph readers already know about the “shale gas revolution” that has turned America into the world’s number one producer of natural gas, ahead of Russia.

Less known is that the technology of hydraulic fracturing—breaking rocks with jets of water—will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.

“The US was the single largest contributor to global oil supply growth last year, with a net 395,000 barrels per day (b/d),” said Francisco Blanch from Bank of America, comparing the Dakota fields to a new North Sea.

Total US shale output is “set to expand dramatically” as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009.

The US already meets 72pc of its own oil needs, up from around 50pc a decade ago.

“The implications of this shift are very large for geopolitics, energy security, historical military alliances and economic activity. As US reliance on the Middle East continues to drop, Europe is turning more dependent and will likely become more exposed to rent-seeking behaviour from oligopolistic players,” said Mr Blanch.

Meanwhile, the China-US seesaw is about to swing the other way. Offshoring is out, ‘re-inshoring’ is the new fashion.

“Made in America, Again”—a report this month by Boston Consulting Group—said Chinese wage inflation running at 16pc a year for a decade has closed much of the cost gap. China is no longer the “default location” for cheap plants supplying the US.

A “tipping point” is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.

“A surprising amount of work that rushed to China over the past decade could soon start to come back,” said BCG’s Harold Sirkin.

The gap in “productivity-adjusted wages” will narrow from 22pc of US levels in 2005 to 43pc (61pc for the US South) by 2015. Add in shipping costs, reliability woes, technology piracy, and the advantage shifts back to the US.

The list of “repatriates” is growing. Farouk Systems is bringing back assembly of hair dryers to Texas after counterfeiting problems; ET Water Systems has switched its irrigation products to California; Master Lock is returning to Milwaukee, and NCR is bringing back its ATM output to Georgia. NatLabs is coming home to Florida.

Boston Consulting expects up to 800,000 manufacturing jobs to return to the US by mid-decade, with a multiplier effect creating 3.2m in total. This would take some sting out of the Long Slump.

As Philadelphia Fed chief Sandra Pianalto said last week, US manufacturing is “very competitive” at the current dollar exchange rate. Whether intended or not, the Fed’s zero rates and $2.3 trillion printing blitz have brought matters to an abrupt head for China.

Fed actions confronted Beijing with a Morton’s Fork of ugly choices: revalue the yuan, or hang onto the mercantilist dollar peg and import a US monetary policy that is far too loose for a red-hot economy at the top of the cycle. Either choice erodes China’s wage advantage. The Communist Party chose inflation.

Foreign exchange effects are subtle. They take a long to time play out as old plant slowly runs down, and fresh investment goes elsewhere. Yet you can see the damage to Europe from an over-strong euro in foreign direct investment (FDI) data.

Flows into the EU collapsed by 63p from 2007 to 2010 (UNCTAD data), and fell by 77pc in Italy. Flows into the US rose by 5pc.

Volkswagen is investing $4bn in America, led by its Chattanooga Passat plant. Korea’s Samsung has begun a $20bn US investment blitz. Meanwhile, Intel, GM, and Caterpillar and other US firms are opting to stay at home rather than invest abroad.

Europe has only itself to blame for the current “hollowing out” of its industrial base. It craved its own reserve currency, without understanding how costly this “exorbitant burden” might prove to be.

China and the rising reserve powers have rotated a large chunk of their $10 trillion stash into EMU bonds to reduce their dollar weighting. The result is a euro too strong for half of EMU.

The European Central Bank has since made matters worse (for Italy, Spain, Portugal, and France) by keeping rates above those of the US, UK, and Japan. That has been a deliberate policy choice. It let real M1 deposits in Italy contract at a 7pc annual rate over the summer. May it live with the consequences.

The trade-weighted dollar has been sliding for a decade, falling 37pc since 2001. This roughly replicates the post-Plaza slide in the late 1980s, which was followed—with a lag—by 3pc of GDP shrinkage in the current account deficit. The US had a surplus by 1991.

Charles Dumas and Diana Choyleva from Lombard Street Research argue that this may happen again in their new book “The American Phoenix”.

The switch in advantage to the US is relative. It does not imply a healthy US recovery. The global depression will grind on as much of the Western world tightens fiscal policy and slowly purges debt, and as China deflates its credit bubble.

Yet America retains a pack of trump cards, and not just in sixteen of the world’s top twenty universities.

It is almost the only economic power with a fertility rate above 2.0—and therefore the ability to outgrow debt—in sharp contrast to the demographic decay awaiting Japan, China, Korea, Germany, Italy, and Russia.

Europe’s EMU soap opera has shown why it matters that America is a genuine nation, forged by shared language and the ancestral chords of memory over two centuries, with institutions that ultimately work and a real central bank able to back-stop the system.

It is noteworthy that Evans-Pritchard qualifies his predictions by saying that they will occur in “five years or so.” I concur that America has a very bright future ahead; however, this decade will be “dicey,” and it is difficult if not impossible to predict when there will be light at the end of the tunnel—or when the economic tsunami will have run its course and petered out. What we do know is that the Great Depression of the last century did not end until the onset of World War II, at the earliest; and this depression may last just as long.

Lastly, Russia will continue to be a pygmy when compared to the United States—in terms of America’s vibrant democracy, its growth, military power and economic strength, and all other indicia of global power. The same will be true, to a similar degree, with respect to China, although its future is much brighter than that of Russia.

I DO NOT BELIEVE OBAMA IS A U.S. CITIZEN. I FEEL THAT WAS A FAKE BIRTH CERTIFICATE (WAS IT CERTIFIED BY ANYONE) OBAMA IS THE MANCURIAN CANDIDATE WHO WAS SENT HERE TO DESTROY US AND IT SEEMS HE IS DOING A GREAT JOB.

China’s military is developing electromagnetic pulse weapons that Beijing plans to use against U.S. aircraft carriers in any future conflict over Taiwan, according to an intelligence report made public on Thursday.

Portions of a National Ground Intelligence Center study on the lethal effects of electromagnetic pulse (EMP) and high-powered microwave (HPM) weapons revealed that the arms are part of China’s so-called “assassin’s mace” arsenal—weapons that allow a technologically inferior China to defeat U.S. military forces.

EMP weapons mimic the gamma-ray pulse caused by a nuclear blast that knocks out all electronics, including computers and automobiles, over wide areas. The phenomenon was discovered in 1962 after an aboveground nuclear test in the Pacific disabled electronics in Hawaii.

The declassified intelligence report, obtained by the private National Security Archive, provides details on China’s EMP weapons and plans for their use. Annual Pentagon reports on China’s military in the past made only passing references to the arms.

“For use against Taiwan, China could detonate at a much lower altitude (30 to 40 kilometers) … to confine the EMP effects to Taiwan and its immediate vicinity and minimize damage to electronics on the mainland,” the report said.

. . .

“China’s [high-altitude] EMP capability could be used in two different ways: as a surprise measure after China’s initial strike against Taiwan and other U.S. [aircraft carrier strike group] assets have moved into a vulnerable position, and as a bluff intended to dissuade the United States from defending Taiwan with a CVBG,” the Pentagon acronym for carrier strike groups.

In an article whose title is set forth above, Jeremy Warner—assistant editor of the UK’s Telegraph and one of Britain’s leading business and economics commentators—has written:

Little noticed amid the furore of the euro crisis, HSBC’S preliminary survey of China’s factories, published this week, indicated manufacturing activity in the world’s second-biggest economy actually declined in July from the month before, the first such contraction in a year. The HSBC purchasing managers index for China has been falling for months now, indicating a protracted fall off in growth as the Chinese authorities act to rein in rampant inflation.

House prices look like being a major victim of this slowdown. Up to a point, this is deliberate policy for China. With the example of the Western property bubble, which ended very badly indeed, serving as a salutary reminder of the dangers of unchecked real estate prices, the Chinese authorities have taken a number of steps to cool the country’s overheated housing market. And it is working; residential property prices have risen on average by “only” 7pc over the last year, and transaction volumes are lower.

But here’s the problem. Residential and commercial property development have been such a big component of growth in recent years that anything that damages the property market risks upsetting the entire apple cart. Nobody can forecast with any certainty when the crash will come, but come it will. You cannot cram that much development into such a short space of time without there eventually being a correction.

And when it comes, its knock on consequences are going to be extreme, possibly just as seismic as the rolling series of banking crises we’ve had here in the west. As noted in the IMF’s latest staff report on China, published this week, the property sector occupies a central position in the Chinese economy, directly making up some 12pc of GDP. It is also highly connected to the health of basic industries such as steel and cement, and to the success of downstream industries like domestic appliances and other consumer durables.

More worrying still, direct lending to real estate (developers and household mortgages) makes up around 18pc of all bank credit. Again, even by UK standards, this is extreme. And for local authorities, which account for 82pc of public spending in China, property related revenues are an important consituent of the overall revenues used as collateral to back borrowing to fund property and infrastructure development. There’s an element of ponzi scheme here.

The problem with the US and UK economies, it is often said, is that they are unbalanced—too much consumption, not enough investment and net trade. In China, the difficulty is the other way around. Consumption remains in the low 30s as a percentage of GDP, the lowest of any major economy. Again, this is deliberate. The Chinese authorities set policy to prioritise investment over consumption.

Any reading of economic history reveals that in the end this path to growth and development is as unsustainable as excessive consumption.

Will The Euro Crisis Will Give Germany The Empire It Has Always Dreamed Of?

This issue is discussed in an excellent and very sobering article by Peter Oborne, the UK Telegraph’s chief political commentator, which states in pertinent part as follows:

There was one crucial message from yesterday’s shambolic and panicky eurozone summit: today’s predicament contains terrifying parallels with the situation that prevailed 80 years ago [when Wall Street embarked on a second and even more shattering period of decline, by the end of which shares were worth barely 10 per cent of their value at their peak], although the problem lies (at this stage, at least) with the debt rather than the equity markets.

After the catastrophe of 2008, many believed and argued—as others did in 1929—that it was a one-off event, which could readily be put right by the ingenuity of experts. The truth is sadly different. The aftermath of that financial debacle, like the economic downturn after 1929, falls into a special category. Most recessions are part of the normal, healthy functioning of any market economy—a good example is the downturn of the late 1980s. But in rare cases, they are far more sinister, because their underlying cause is a structural imbalance which cannot be solved by conventional means.

Such recessions, which tend to associated with catastrophic financial events, are dangerous because they herald a long period of economic dislocation and collapse. Their consequences stretch deep into the realm of politics and social life. Indeed, the 1929 crash sparked a decade of economic failure around much of the world, helping bring the Weimar Republic to its knees and easing the way for the rise of German fascism.

The faith of leading European politicians and bankers in monetary union, a system of financial government whose origins can be traced back to the set of temporary political circumstances in the immediate aftermath of the Second World War, and which was brought to bear without serious economic analysis, is essentially irrational. Indeed, in many ways, the euro bears comparison to the gold standard. Back in 1929, politicians and central bankers assumed that the convertibility of national currencies into gold (defined by the economist John Maynard Keynes as a “barbaric relic”) was a law of nature, like gravity. European politicians have developed the same superstitious attachment to the single currency. They are determined to persist with it, no matter what suffering it causes, or however brutal its economic and social consequences.

There is only one way of sustaining this policy, as the International Monetary Fund argued ahead of yesterday’s summit in Brussels . . . the only conceivable salvation for the eurozone is to impose greater fiscal integration among member states.

. . .

By authorising a huge expansion in the bail-out fund that is propping up the EU’s peripheral members (largely in order to stop the contagion spreading to Italy and Spain), the eurozone has taken the decisive step to becoming a fiscal union. So long as the settlement is accepted by national parliaments, yesterday will come to be seen as the witching hour after which Europe will cease to be, except vestigially, a collection of nation states. It will have one economic government, one currency, one foreign policy. This integration will be so complete that taxpayers in the more prosperous countries will be expected to pay for the welfare systems and pension plans of failing EU states.

This is the final realisation of the dream that animated the founders of the Common Market more than half a century ago—which is one reason why so many prominent Europeans have privately welcomed the eurozone catastrophe, labelling it a “beneficial crisis”. David Cameron and George Osborne have both indicated that they, too, welcome this fundamental change in the nature and purpose of the European project. The markets have rallied strongly, hailing what is being seen as the best chance of a resolution to the gruelling and drawn-out crisis.

It is conceivable that yesterday’s negotiations may indeed save the eurozone—but it is worth pausing to consider the consequences of European fiscal union. First, it will mean the economic destruction of most of the southern European countries. Indeed, this process is already far advanced. Thanks to their membership of the eurozone, peripheral countries such as Greece and Portugal—and to an increasing extent Spain and Italy—are undergoing a process of forcible deindustrialisation. Their economic sovereignty has been obliterated; they face a future as vassal states, their role reduced to the one enjoyed by the European colonies of the 19th and early 20th centuries. They will provide cheap labour, raw materials, agricultural produce and a ready market for the manufactured goods and services provided by the far more productive and efficient northern Europeans. Their political leaders will, like the hapless George Papandreou of Greece, lose all political legitimacy, becoming local representatives of distant powers who are forced to implement economic programmes from elsewhere in return for massive financial subventions.

While these nations relapse into pre-modern economic systems, Germany is busy turning into one of the most dynamic and productive economies in the world. Despite the grumbling, for the Germans, the bail-outs are worth every penny, because they guarantee a cheap outlet for their manufactured goods. Yesterday’s witching hour of the European Union means that Germany has come very close to realising Bismarck’s dream of an economic empire stretching from central Europe to the Eastern Mediterranean.

History has seen many attempts to unify Europe, from the Habsburgs to the Bourbons and Napoleon. This attempt is likely to fail, too. Indeed, a paradox is at work here. The founders of the European Union were driven by a vision of a peaceful new world after a century of war. Yet nothing could have been more calculated to create civil disorder and national resistance than yesterday’s demented move to salvage the single currency.

There are those who preach the tenets of creating a global government; and they maintain that the constitution of a new world order is essential to maintain democracy. Also, they contend that the regulation of the economy by a global financial institution can be a solution to the financial crisis that began in 2007, and such an institution would be a first step towards the creation of a global government, of which the European Union is an illustration.

Barack Obama agrees with this; and it is among the many reasons why he must not be reelected next year. Indeed, he will “retreat” either to Chicago or Hawaii no later than January of 2013, to lick his political wounds and write his memoirs, and work full time on his golf scores and his presidential library.

“Global governance” is pure and utter nonsense. Indeed, lots of Americans would gladly get rid of the UN, and ship it to France or elsewhere in Europe, and let the French or other Europeans pay for it. Global governance is “Mary Poppins-esque” and/or “Alice in Wonderland-esque.”

Americans do not want Germany or France participating in the governance of anything relating to the United States, any more than Hitler’s Germany should have done it. This is among the reasons why World War II was fought by the United States. America’s history abhors “meddling” in our affairs, which is exactly what global governance entails, and much much more. A majority of Americans might be willing to give up their lives fighting to insure that this never happens.

France did not win World War II. Americans saved Frenchmen from “enslavement” by the Germans. But for the United States, the French might be speaking German today as their “native” tongue. Indeed, a German-American—Dwight David Eisenhower—destroyed Hitler and his monstrous “Thousand-Year Reich.” France did not do it. France was flat on its pathetic back.

The United States has real enemies in this world today, who want to destroy us (e.g., China’s military, Putin and his Stalinist thugs in Russia, North Korea, Islamic fascists). We cannot rely on France or Europe to defend us—militarily, economically or in any other way. Indeed, France and Germany are perhaps the last countries in the world to preach to the United States about democracy. Americans have given their lives for it. France has only “talked” about it.

Lastly, Americans are not about to trust their survival, the survival and national security of our great country, and our freedoms and democracy to France or Germany, two countries that lost World War II.

It took something like 70 years for the big government centralized control Soviet Union to fail. The much milder European form of big government is also struggling to stay viable.

Europe in general has been living at a higher standard of living than their ability to generate economic value justifies for some decades by one manipulation after another.

One technique – hardly original – has been for governments to use long term debt to fund annual operational transfers of funds to pay very high salaries/pensions/benefits to government workers, and to make generous welfare/funds transfer to create a more equal society.

They co-opted private banks to help sustain this by incorporating in the Basel regulations provisions allowing banks to count 0 capital cost against holdings of ‘sovereign’ debts whereas the assets (i.e. loans) to private companies are marked at much higher costs.

This has several effects. Since sovereign debt costs are often used to benchmark all private lending there’s a bias towards borrowing running throughout (funds often derived via market issued sources vs direct bank lending, but also significant lending despite bias) society. In other words people/consumers borrow more and save less than they would have.

This is one reason in the last few decades we in the US have had a trading deficit – turbo charged borrowing by consumers, which in a globalizing context means buying from abroad.

In the case of governments it has meant they’ve been able to issue far more debt than they would have allowing them to continue their wealth redistribution charging the bill to future generations.

In Europe, it meant that with the Euro German low interest rates were made available to other Europeans whose local systems were for a time able to borrow at a faster rate funding a extra cushy live style until the process began reaching its limits first with Greece, but also across several of the non German countries.

It meant that many private banks throughout Europe loaded up – many times for political reasons on top of the 0 capital costs – on sovereign debt making the problem of potential defaults by first Greece, and now Spain and Italy etc, very much a threat crossing borders.

With 08 bust when the excessive debt levels were made apparent to most people, we initiated a different painful de leveraging phase – something the Japanese have been contending with for more than 15 years – in which keeping interest rates low won’t work anymore.

The Europeans like most people prefer to put off today’s painful medicine until tomorrow, which is probably why they keep insisting on viewing the problem as one of liquidity instead of solvency.

The cute idea to foist off the problem on the Germans in order to delay the medicine a bit longer won’t work even should the Germans be foolish enough to accept Greece and other liabilities as their own. More likely the Germans in exchange for acceptance will require the transfer of some significant measure of fiscal control sovereignty – a cure that the current citizens receiving the favor may find accelerates the adjustment to more austere living conditions than if they muddle along as they have been.

Either way will mean difficult adjustments. One way though will mean consolidating control under German authority while the other will likely mean returning to a pre-Euro situation. The first would be an ironic turn simply because one of the primary reasons for undertaking the Euro centralization was to preempt a fourth go by Germany at bringing Europe under German control.

Will China Go To War To Protect Its Core Interests In The South China Sea?

The Wall Street Journal has reported that smaller Asian nations such as Vietnam were already wary of China’s growing military prowess, but the launch of its first carrier is yet another message about its increasing strength.

China claims nearly all of the South China Sea, which the U.S. has said it has a national interest in making sure freedom of navigation continues in an area home to vital shipping lanes.

Vietnam, the Philippines and several other Asian nations also stake claims to all or part of areas of the sea, which is believed to be potentially rich in resources. Both countries have looked to the U.S. following recent rows with China over their oil-exploration activities. Beijing denies it has interfered, but Hanoi and Manila have accused the communist giant of overstepping its bounds.

Hanoi has reacted sharply, holding live-fire drills in the South China Sea and allowing rare protests to be held for more than two months. The tightly controlled communist government typically stamps out any demonstrations quickly, but on Sunday some 200 people again marched around Hanoi’s central Hoan Kiem Lake chanting “Down with China!”

. . .

Last month, top Chinese Gen. Chen Bingde publicly scolded Adm. Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, during his visit to Beijing, saying the U.S. decision to hold joint maritime exercises with the Philippines and Vietnam was bad timing and could have been rescheduled, given the current rifts.

Adm. Mullen defended the exchanges, saying they were pre-planned.

“I consider this visit good timing. There is never bad timing,” [Capt. David A. Lausman, commanding officer of the USS George Washington] said of Saturday’s [visit by the American nuclear carrier and its aircraft carrier battle group off Vietnam’s southern coast]. “We are operating in international waters together as friends. There’s never a bad time for friends to get together and meet.”

Three U.S. Navy ships paid a port call to the central Vietnamese city of Danang last month for joint exchanges, including search-and-rescue operations. The Vietnam War ended in 1975, but the former enemies have worked to strengthen military ties since relations were normalized in 1995.

The Philippines, a U.S. ally, has also recently sparred with China, also alleging interference with its energy exploration efforts in the South China Sea. The U.S. conducted naval exercises there in June, including live-fire drills.

The USS George Washington is essentially a floating city that can house some 5,000 sailors and pilots, as well as 70 aircraft, and is equipped with its own hospital. Based in Japan, it is one of the world’s largest warships and can haul about four million pounds (1.8 million kilograms) of bombs.

Pilots blasted off from the flight deck during the weekend visit, soaring over the South China Sea as the Vietnamese and U.S. Embassy visitors angled their cameras for souvenir photos of the powerful display.

“It took us a hundred years to get right here,” Capt. Lausman said of the navy’s century of building aircraft carriers. “And we have 11 of these throughout the world right now, not just one.”

Steps are being taken by Barack Obama to weaken America’s military might, which must be thwarted in their entirety. Indeed, Obama must not be reelected; his presidency must end as soon as humanly possible; and he must be sent packing either to Chicago or Hawaii no later than January of 2013, to lick his political wounds and write his memoirs, and work full time on his presidential library. It cannot happen fast enough for the good of the United States, and our national security interests and well being.

I don’t believe war with China is inevitable. The painful depression in the 30’s and the really horrific hyperinflation in Germany, Hungary, and Austria in the 20’s were key ingredients leading to WWII.

We know what happened then. Plus we in the US will probably succeed in removing Obama in 2012 thus hopefully avoiding the worst that continuing to follow Keynesian voodoo economic ‘solutions’ would bring our way.

In the short term Obama is doing much harm including to our military. He has been starving military R&D in order to feed funds to the wars. But…

We should all thank Obama profusely. He has done more to discredit leftist thinking and in particular Keynesian economics (I thought it had been done in back in the late 70’s and early 80’s, but it rose again) than any single person in history. He is single handedly creating the necessary political movement to push back against his ideas / policies. And it’s likely that this movement will continue to take back power (note the resurgence in State and local governments already) with a national mandate for fiscal reform.

Once he’s gone the short term damage will be more than compensated by the promise that we’ll never elect another leftist. We’re just lucky he turned out to be as impotent as he did regarding his ability to carry out his vision to remake America.

China is going to suffer, but nothing like what they’ve already experience under Mao. They will adjust as the bust over there continues to roll out and it will depress their future growth and potential power. I agree there are extremely hostile elements within the government and in particular the military that resemble clones from a pre WWII Germany, but they’re a long way from going down the same path as the Germans back then.

The best move we could make is to carefully and selectively back off from seeking confrontation with their military in every theater as it grows and asserts itself – give them plenty of rope. It’s already very clear that they can’t resist pushing way too hard against neighbors. So give them rope and let their neighbors counter organize among themselves and by seeking out new ties with us.

(3) Obama is doing great damage to our military, which must be thwarted;

(4) Obama “is single handedly creating the necessary political movement to push back against his ideas / policies”;

(5) “Once [Obama is gone,] the short term damage will be more than compensated by the promise that we’ll never elect another leftist”; and

(6) “China is going to suffer, but nothing like what they’ve already experience[d] under Mao.”

The risk, of course, is that China’s military—which arguably is not controlled by its civilian leaders—launches an EMP or other attack against us, which might cripple the United States and/or kill most Americans.

Lastly, while you might be correct about giving China’s military enough “rope” to hang themselves, the risks of miscalculations are enormous, as you know all too well. I do not believe in giving them any rope at all.

The spectacles of joy in Tripoli today recall the delirious scenes in Baghdad’s Firdos Square in 2003—the statues pulled down, the palaces of faux grandeur and kitsch ransacked by people awakening to their own sense of violation and power, the man at the helm who had been full of might and bravado making a run for it, exposed as a paranoid and pretender, living in fear of his day of reckoning.

In neither case had the people of these two tormented societies secured their liberty on their own. In Baghdad, the Baathist reign of terror would have lasted indefinitely had George W. Bush not pushed it into its grave. There had been no sign of organized resistance in that terrified land, not since the end of the 1991 Gulf War and the slaughter that quelled the Shiite uprising.

Libya offered its own mix of native resistance and foreign help.

. . .

But it was Egypt, the big country on Libya’s eastern frontier, that shook the Libyan tyranny. In February, after a popular insurrection that held the Arab world enthralled, Hosni Mubarak bent to his people’s will and relinquished power. Six days later a spark caught fire in Benghazi, Libya’s second-largest city. A reluctant American president was pulled into the fight. Gadhafi’s fate was sealed—NATO would function as the air force of the rebellion.

. . .

But Libya is not the historical knot that Iraq was, and for all the surface similarities, Gadhafi was never the menace that Saddam had been. In stark contrast to the challenges faced by Iraq, fair winds attend this Libyan venture.

This rosy assessment for Libya stands in sharp contrast with the sobering views of Arnaud de Borchgrave—the distinguished editor-at-large of The Washington Times and of United Press International.

Indeed, de Borchgrave has written:

After 42 years in power in Libya, Moammar Gadhafi’s regime is history but unmentioned during NATO’s five-month bombing campaign is that the victorious rebel regime of Benghazi is heavily infiltrated by Islamist extremists.

Even more disturbing are the following facts about Libya, which de Borchgrave has described in great detail in an article—entitled, “Global con?”—which is essential reading:

Were the United States, France, Britain, Belgium, Denmark, Norway, Qatar and the United Arad Emirates—the NATO-led coalition that set out to overthrow Col. Moammar Gadhafi’s regime—snookered by al-Qaida? A preposterous scenario with some disturbing factual elements.

. . .

“[T]he story of how an al-Qaida asset turned out to be the top Libyan military commander in still war-torn Tripoli is bound to shatter—once again—that wilderness of mirrors that is the ‘war on terror,’ as well as deeply compromising the carefully constructed propaganda of NATO’s ‘humanitarian’ intervention in Libya.”

His name . . . is Abdelhakim Belhaj. Few in the West and across the world have ever heard of him. Gadhafi’s fortress of Bab-al-Aziziyah, originally his army headquarters when he seized power in 1969, was “essentially invaded and conquered 10 days ago by Belhaj’s men—who were “at the forefront of a militia of Berbers from the mountains southwest of Tripoli.”

The militia, this account says, is the so-called Tripoli Brigade, . . . [which] turned out to be the rebels’ most effective militia in six months of tribal/civil war.

Abdelhakim Belhaj, also known as Abu Abdullah al-Sadek, is a Libyan jihadi . . . [who] honed his skills with the mujahedin in the 1980s anti-Soviet jihad in Afghanistan.

Belhaj is the founder of the Libyan Islamic Fighting Group and its de facto emir. . . . After the Taliban captured Kabul in 1996, the LIFG kept two training camps in Afghanistan, one of them, 19 miles north of Kabul—run by Abu Yahya (a high-ranking member of al-Qaida)—was “strictly for al-Qaida-linked jihadis.

After Sept. 11, 2001, Belhaj, still according to this account, moved to Pakistan and then to Iraq, where he befriended Abu Musab al-Zarqawi—all this before al-Qaida in Iraq pledged allegiance to Osama bin Laden and Ayman al-Zawahiri.

. . .

In 2007, Zawahiri (bin Laden’s deputy) officially announced the merger of LIFG and al-Qaida in the Islamic Maghreb. “So, for all practical purposes since then,” says this version of events, “LIFG/AQIM have been one and the same—and Belhaj was/is its emir.”

Before year’s end in 2007, LIFG was calling for jihad against Gadhafi and also against the United States and Western “infidels.”

Every intelligence agency in the United States, Europe and the Arab world knows where Belhaj is coming from,” writes Escobar. Belhaj has made sure in Libya that he and his militia will only settle for Shariah law.

The assassination of rebel military commander Gen. Abdel Fattah Younis—by the rebels themselves—seems to point to Belhaj “or at least people very close to him.”

Younis, before he defected from the regime, was in charge of Libya’s Special Forces as they battled the LIFG in Cyrenaica near Benghazi between 1990 and 1995. It was in 1993 that Gadhafi asked this reporter to tell the CIA director that he wanted to work with the United States against Islamist extremists in Cyrenaica.

[A]ll the top military commanders working with NATO are LIFG, from Belhaj in Tripoli to Ismael as-Salabi in Benghazi and Abdelhakim al-Assadi in Derna.

. . .

“[I]t does not require a crystal ball to picture the consequences of LIFG/AQIM—having conquered military power and being among the war ‘winners’—not remotely interested in relinquishing control just to please NATO. Meanwhile, amid the fog of war, it is unclear whether Gadhafi is planning to trap the Tripoli brigade in urban warfare or to force the bulk of rebel militias to enter the huge Warfalla tribal areas.”

Gadhafi’s favorite wife belongs to the Warfalla, Libya’s largest tribe, with up to one million people and 54 sub-tribes.

“The inside word in Brussels . . . is that NATO expects Gadhafi to fight for months, if not years; thus the bounty on his head and the desperate return to NATO’s plan A, which was always to take him out.”

Libya, according to this prediction, may now be facing the specter of a twin-headed guerrilla Hydra; Gadhafi forces against a weak TNC central government and NATO boots on the ground; and the LIFG/AQIM nebula in a jihad against NATO.”

A harum-scarum scenario of NATO snookered by al-Qaida affiliates that can only please China.

Will China, Islamic fascists and al Qaeda win the war in Libya; and once again has America’s raving narcissist and consummate demagogue—its “Hamlet on the Potomac” and “Jimmy Carter-lite”—Barack Obama, been nothing more than a fool, a buffoon, and a feckless naïf, who lost the Middle East?

China Is Preparing For Space Warfare, And Is A Growing Threat To The United States

This is the conclusion of Army Lt. Gen. Ronald L. Burgess, Director of the Defense Intelligence Agency, the agency for which I worked when I was a young Army officer at the Pentagon. His warnings are sobering, and must be heeded:

Burgess stated in little-noticed written testimony prepared for an appearance before the Senate Armed Services Committee that Beijing is developing missiles, electronic jammers, and lasers for use against satellites.

Much of the space warfare activity is being carried out under the guise of China’s supposedly non-military space program, he said.

“China’s successfully tested a direct ascent anti-satellite weapon (ASAT) missile and is developing jammers and directed-energy weapons for ASAT missions,” he said. “A prerequisite for ASAT attacks, China’s ability to track and identify satellites is enhanced by technologies from China’s manned and lunar programs as well as technologies and methods developed to detect and track space debris.”

China’s January 2007 anti-satellite missile test involved a modified DF-21 missile that destroyed a Chinese weather satellite. The blast created a debris field in space of some 10,000 pieces of space junk that could damage both manned and unmanned spacecraft.

For the U.S. military, the successful 2007 ASAT test represented a new strategic capability for China. Analysts estimate that with as many as two-dozen ASAT missiles, China could severely disrupt U.S. military operations through attacks on satellites.

Burgess said China rarely admits that its space program has direct military uses and refers to nearly all satellite launches as scientific or civil.

Additionally, Burgess said Chinese state-run enterprises “continue to proliferate space and counter-space related capabilities,” including some with direct military applications.

For example, China’s Beidou global positioning system satellites will be available for regional users this year and globally by 2020, he said.

The satellites will provide foreign militaries with precision targeting capabilities through purchases of Chinese Beidou receivers and services.

The system will provide foreign militaries with “greater redundancy and independence in a conflict scenario that employs space assets,” he said.

The Chinese, as well as the Russians, are also developing space capabilities that interfere with or disable U.S. space-based navigation, communications, and intelligence satellites.

Moreover, North Korea has demonstrated its ability to disrupt U.S. navigational capabilities through Soviet-made electronic jammers placed on vehicles near the North-South demarcation line that, when activated, were able to disrupt U.S. Global Positioning System signals up to 62 miles away.

If you read every negative or critical word that I have written above, you will understand and realize fully that not one of them is directed at the Chinese people, but rather all are directed at the country’s civilian and military leadership that oppresses them and has militaristic designs on others.

I urge you to read all of my comments, including those about Mao Tse-tung’s reign of terror.

The UK Telegraph‘s International Business Editor in London, Ambrose Evans-Pritchard, has written another article that is worth reading, this time about China:

“Severe deflation pressures are rippling across the country,” said Alistair Thornton and Xianfeng Ren from IHS Global Insight. “Deflation, not inflation, is the greatest short-term threat to the Chinese economy.”

. . .

Critics say Beijing let the property boom go too far and then hit the brakes too hard last year. Monetary tightening led to a contraction in real M1 money. The delayed effects kicked in this year just as Europe fell back into recession and the US slowed abruptly.

. . .

[R]eformers are locked in a struggle with military hawks and Mao revivalists linked to Chonqing chief Bo Xilai. They know that China’s post-Lehman credit spree in 2008 went too far but keeping growth alive has become a political imperative. Chinese exporters are now in serious difficulty. Caixin magazine reports that China’s entire solar industry is “on the verge of bankruptcy” as it struggles with debts built up during its world conquest over the past four years.

Because China is addicted to top down/managed solutions it is unlikely to find adequate responses to the problems arising from its earlier decisions to break from its bottom up economic driven growth strategy when the downturn among its major customers hit and to use Keynesian top down ‘stimulus’ measures. It also has not been able to reign in ‘crony’ elements which are able to seize economic value more easily in a top down system than one allowing individuals freer reign, and which therefore are motivated to prevent needed reforms from taking place. My guess is that China will revert reflexively to its top down autocratic style of managing stifling reforms for the near term. In other words this is not the time to invest in China.

[T]he Beijing Olympics in 2008 symbolically marked the peaking of Chinese power. Everything began to go downhill afterwards. Caught up in the global economic crisis, the Chinese economy has never fully recovered its momentum.

Of greatest concern, or so I believe, is the aggressive, militaristic hatred of the United States by young Chinese officers, which is discussed in the article above. Indeed, as I have written:

In early 2001, at the beginning of George W. Bush’s presidency, China’s military tested his metal by forcing down one of our spy planes near the island of Hainan. There were serious questions raised then—as they are being raised now—about whether China’s civilian leadership was fully in control of the country’s military.

Citing the New York Times, I added:

Chinese military men, from the soldiers and platoon captains all the way up to the army commanders, were always taught that America would be their enemy.

As the Chinese economic “miracle” implodes, they may seize more and more power. Gone from the scene might be those who would seek to exercise restraint.

Only time will tell, but it is likely that the worst is yet to come for China, and it may get very ugly.

In a UK Telegraph article entitled, “Military conflict ‘looms’ between China and Japan”—and subtitled, “War between China and Japan looms, with neither power willing to back down over a disputed chain of islands, expert warns”—it is stated:

The spat over the Diaoyu or Senkaku islands has escalated dramatically in the past month with violent protests across China.

. . .

“There is a danger of China and Japan having a military conflict,” said Yan Xuetong, one of China’s most influential foreign policy strategists, and a noted hawk.

“One country must make a concession. But I do not see Japan making concessions. I do not see either side making concessions. Both sides want to solve the situation peacefully, but neither side can provide the right approach,” he added.

He warned that unless one side backs down, there could be a repeat of the Falklands Conflict in Asia.

. . .

He added: “China takes a very tolerant policy elsewhere, with smaller powers. But the case of Japan is different. There is history between us. Japan is a big power. It regards itself as a regional, and sometimes a world power. So China can very naturally regard Japan as an equal. And if we are equal, you cannot poke us. You cannot make a mistake.”

Mr Yan is the dean of International Relations at Tsinghua university, the elite college that schooled both China’s president, Hu Jintao, and his likely successor, Xi Jinping.

. . .

In the balance is some £216 billion of bilateral trade. Last year, exports to China were responsible for three per cent of the Japanese economy.

. . .

Several Japanese businesses on the Chinese mainland have had to shut down because of the crisis. Nissan, which relies on the Chinese market for as much as 25 per cent of its revenues, has shut down until October 7 after demand for its cars plummeted.

Toyota has suspended plants in Tianjin and Guangzhou until October 8.

Chinese consumers are shying away from Japanese cars not just because of nationalism, but out of fear after one man in Xi’an was beaten into a coma for driving a Japanese marque.

All Nippon Airways, meanwhile, said 40,000 reservations had been cancelled on flights between China and Japan from this month to November. A cruise line between Shanghai and Nagasaki will suspend its operations from October 13. Guizhou television has banned all advertisements by Japanese brands.

Mitsumi, a supplier for Nintendo, has not reopened its factory in Qingdao since September 16, while two toothbrush factories owned by Lion Corporation also remain shuttered.

Mr Yan predicted that if there was a military confrontation between China and Japan, the United States would not physically intervene.

. . .

Mr Yan said he expected whoever wins the US presidential election to continue to toughen policy on China.

“In terms of the economy, China and the US are partners. But in terms of security, they are rivals. We both know we cannot get along. Both sides are always alert to the other’s military policy,” he said.

This is the title of an article in the UK’s Telegraph by its International Business Editor, Ambrose Evans-Pritchard—and subtitled, “Washington has issued a blistering attack on China for persistent breaches of world trade rules and abuse of industrial secrets, accusing Beijing of failing to abide by treaty obligations”—which states:

China is still flouting World Trade Organisation rules 11 years after it first joined, misusing the complaints machinery for tit-for-tat retaliation, said US Trade Repesentative Ron Kirk.

. . .

The report accused Chinese officials of running rough-shod over foreign firms, forcing them to give up trade secrets in clear violation of WTO rules.

The harsh language will infuriate Beijing at a time when tensions are already high over maritime disputes on the Pacific Rim, where the US is increasingly embroiled as the region’s guarantor. Washington’s so-called “Asian Pivot” is viewed with deep mistrust by China’s Politburo as the start of an encirclement strategy.

The trade frictions are in stark contrast with growing US support for a sweeping trans-Atlantic trade deal with Europe, aimed at eliminating tariffs. It would be the most ambitious deal of its kind ever attempted.

. . .

The US has filed fifteen cases against China at the WTO, the most recent alleging unfair duties on US vehicles and car parts. Washington won a panel dispute over steel duties in September. China in turn has a clutch of cases claiming illegal use of anti-dumping measures by the US.

The US trade report marks a switch away from griping about China’s currency—less clearly undervalued after years of wage inflation—towards a closer focus on disguised protectionism.

It targeted a wide range of alleged abuses, including subsidies, attempts to keep out foreign imports and companies, and failure to enforce intellectual property rights.

. . .

For all the complaints, China has become America’s biggest export market, worth $131bn in 2011. Its current account surplus has fallen from 10pc of GDP five years ago to 2.6pc this year.

In an article subtitled, “NORTH Korea led by tyrant Kim Jong-un has sensationally vowed to launch a NUCLEAR attack on the USA,” the UK’s Sun has reported:

The provocative statement comes weeks after the country conducted underground nuclear tests which caused a massive earthquake.

America’s west coast cities of Los Angeles and San Francisco are feared to be in Kim’s sights.

A foreign ministry spokesman said: “Since the United States is about to ignite a nuclear war, we will be exercising our right to pre-emptive nuclear attack against the headquarters of the aggressor in order to protect our supreme interest.”

. . .

On Tuesday North Korea threatend to scrap the armistice that ended the 1950-53 war with South Korea.

And it criticised military exercises between the US and South Korea. Pyongyang said it was shutting off a military hotline with the US and South Korea.

North Korea’s KCNA agency quoting a military source said: “We will completely nullify the Korean armistice”.

Last month the world was put on high alert when North Korea carried out its biggest nuclear blast yet.

The giant underground explosion caused an earthquake with a magnitude of 4.9.

The banned blast—which took place in the remote, snowy, north-east of the country—drew global outrage, even from Pyongyang’s only major ally China.

The actual device was thought to be smaller than those in two earlier tests—raising fears that the crackpot Communist state is close to its aim of perfecting a missile capable of hitting its number one enemy the US.

. . .

In February North Korea poached Michael Jackson’s peace anthem We Are the World to soundtrack a chilling video showing a US city under missile attack.

The bizarre footage was uploaded on the secretive state’s official webpage.

The propaganda movie depicts a smiling lad dreaming of a regime rocket being launched into the air and travelling to America.

The three-and-a-half minute vid[eo] then showed a mystery city full of skyscrapers being attacked with multiple explosions, while the Stars and Stripes flag flutters in the background.

To some in this world, the destruction of San Francisco (e.g., the Gay capital of the United States) and LA (e.g., the global center of far-Left, immoral “entertainment”) would be the 21st Century equivalent of the destruction of Sodom and Gomorrah—which were completely consumed by fire and brimstone.

A male narrator describes different stages of the invasion, including the destruction of forces under the US Pacific Command with “powerful weapons of mass destruction.”

The video shows pictures of an American aircraft carrier, and images of the Seoul skyline superimposed with footage of paratroopers and North Korean military aircraft.

The narrator says: “The crack stormtroops will occupy Seoul and other cities and take 150,000 US citizens as hostages.”

The video was posted on the North’s official website, Uriminzokkiri, which distributes news and propaganda from the state media.

A video released early last month showed New York in flames after an apparent missile attack, and another two weeks later depicted US soldiers and President Barack Obama burning in the flames of a nuclear blast.

And earlier this week, another video showed the dome of the US Capitol building in Washington exploding in a fireball.

The latest offering from the Pyongyang propaganda department comes during escalating tensions on the Korean peninsula.

Kim jong-un’s brutal regime has threatened strikes on US military bases in Japan and Guam, and is trying to build nuclear armed ballistic missiles that could hit Europe.

Gen. James Thurman, the top U.S. commander in South Korea, said that in his two years on the job he has never seen things as tense as they are right now, telling ABC News the situation on the Korean peninsula as “volatile” and “dangerous.”

Thurman said in his exclusive interview with ABC News that his ” job is to prevent war,” but that his greatest fear is a “miscalculation” that causes “a kinetic provocation.” In military parlance, kinetic refers to combat.

Thurman said North Korea’s recent rhetoric has made the situation on the Korean peninsula “a dangerous period,” but he added, “I think we’re managing it quite well because on this side of the line we’re very calm. And we’re confident.”

Thurman commands the 28,500 American military forces based in South Korea and also serves as the commander of United Nations Command.

. . .

While he described North Korea’s missiles as their largest threat, Thurman pointed across the DMZ and noted “there’s 14,000 tubes of artillery just across this line beyond that far mountain range over there.” That artillery poses a direct threat to Seoul, the South Korean capital which is located just 27 miles from the DMZ.

It is only possible to deal with rash actors and actions if one’s opponent is rational if not sane.

We learned from Pearl Harbor and 9/11 that there are enemies in this world who want to destroy the United States, and are willing to defy conventional norms. One such actor is North Korea under Kim Jong-un.

He could launch an invasion of the south that would be tantamount to a Blitzkrieg, killing or taking American military personnel as prisoners, and overrunning our South Korean ally. He could launch missiles against Japan and American forces in the Pacific that would be devastating.

The U.S. would have to act quickly, and the only real deterrents are nuclear strikes against the command and control in North Korea, and against key military targets and forces massed against us and our ally.

No amount of talking would have prevented Pearl Harbor or 9/11, and the same may be true this time. Indeed, a massive strike against the North may prevent a “Pearl Harbor” that reaches American cities, including but not limited to a nation-ending EMP Attack.

North Korea has always eclipsed Iran as a nuclear-arms threat to the United States, except in the mind of Benjamin Netanyahu—who has been the greatest threat to peace in the Middle East, and has continuously sought to provoke America into a third war in the region.

As I have written:

The path on which Netanyahu is leading the Israelis is fraught with peril for their tiny Jewish nation . . . and potentially for Jews worldwide. He is determined to take the United States and the American people on the “joy ride” with him, which is utter madness.

This is the conclusion reached in a fascinating article by Richard Spencer, which appears in the UK’s Telegraph:

As time passes, the more it becomes apparent, as it should have been from the start, that the Russian “triumph” over America on the chemical weapons deal in Syria was an illusion. Vladimir Putin is driving Russia ever deeper into a mire in Syria. The conflict is repeatedly compared to the Iraq war, but the comparison with Afghanistan is much closer. Some have called it “Iran’s Vietnam” but there’s a chance it may become Russia’s Afghanistan all over again. President Obama’s decision to call off air and missile strikes in return for a chemical weapons deal may have been a short-term tactical win for Mr Putin, in that America was stopped, for now, from intervening in Russia’s “patch” (though such an intervention was beginning to look less and less likely anyway). That is one stated goal of Mr Putin. His longer-term goal is to frustrate American expansionism (what Washington likes to see as the spread of Western democratic values).

. . .

We have been told in Britain to worry about hardened jihadists returning from Syria (or Somalia) to strike back home. Yet we are no longer such a target as we were, having pulled out of Iraq, and being about to pull out of Afghanistan. Yet jihadists are being regularly told to focus on the insurgencies in those parts of the Russian Caucasus home to Muslim populations, such as Chechnya, Ingushetya and Daghestan. Remember Beslan? And this is before Russia is sucked militarily into the conflict. A good opportunity for that will come if, as its foreign minister, Sergei Lavrov has promised, it provides troops to defend the chemical weapons inspectors tasked with dealing with the chemical weapons programme under the UN-sponsored deal.

. . . Russian prestige in its announcement depended on the outside world listening to two very strong messages—without noticing that they were contradictory. One, repeated by Vladimir Putin in his article for The New York Times, was that President Assad was innocent of using chemical weapons and that it was the opposition’s doing. The second was that Russia had scored a hit in persuading Mr Assad to give up his chemical weapons. There will be some who are so determined to deny Mr Assad’s guilt that they will insist that this was some act of extraordinary benevolence by both leaders—a supreme example of turning the other cheek, to be the victim of a chemical weapons attack and give up your own in response.

However, if that is the case, the implicit agreement must be that Russia will defend Assad to the end, having taken away its ultimate deterrent, and that Russia has tied its own fortunes to the regime, as it unwittingly did in Afghanistan in the 1980s. It is far more likely, it seems to me, that Russia is convinced that the Aug 21 attack was the work of Mr Assad and that giving up his chemical weapons was its own (despairing) demand in return for continued support. There’s an interesting anecdote (among many) in a New Yorker profile this week of the head of the Iranian al-Quds force in which US intelligence agencies in December saw Assad troops loading up chemical weapons, and, via Russia and Iran, had the attack stopped. It’s unverifiable—of course—but it makes much more sense to see Russia as also tearing its hair out over its Syrian protégé (even Putin has given hints of that). Now Mr Putin has been handed the Syrian brief, but it is one he cannot now win. Russia will be vilified for Assad’s crimes; but if Assad somehow wins—or at least stays in some sort of power—it is Iran whose interests will be preserved. It is not clear, any more, what interests Russia has in Syria, other than pride, and it can’t have a lot of that, can it?

So much for Syria, but that’s just one strategic loss suffered by Mr Putin. It is often said that he is more determined to oppose a UN resolution over Syria because he allowed one over Libya and felt cheated when the West used it to help topple Col Gaddafi. This argument has always seemed odd to me since it was perfectly obvious at the time that this was the intention of the UN resolution Britain and France pushed through, but it remains the case that the fall of Gaddafi also represented the death of someone else who—like Saddam before him—was an albeit eccentric and unreliable part-client of Russia (at least of its arms industry). Of course it needs to defend Assad—from Ceaucescu to Gaddafi, the final moments of Russian proteges have not been pretty. Meanwhile, while Mr Putin’s attention was turned elsewhere, he’s losing elsewhere too: see this Economist article) for how Russia is being replaced by China as the leading influence in Moscow’s former Central Asian colonies.

There is little evidence, to me, that by the time Mr Putin does eventually retire, he will have restored Russia’s place in the world. Much more likely, that his macho posturing will be seen to have obscured Russia’s continuing decline, and prevented action to prevent it. The worst that can be said of President Obama meanwhile is that he is making the same mistake in Syria as President George Bush senior (allegedly) did in Afghanistan. Mrs Thatcher’s famous warning about Mr Bush (“don’t go wobbly, George!) could certainly apply to his current successor. By standing aside as Syria burns in the fallout from the growing inability of Russia to control its fiefdoms, he may well be setting aside trouble for later. Assad is unlikely to win back his northern kingdom, which could easily become a lawless centre for al-Qaeda operations, as Afghanistan did. But the truth is that strategically America has little to lose. It still has its key Middle East allies—Israel, the Gulf states. If a consensus with Iran is formed, unlikely I know but not to be ruled out, it could find its position strengthened, even if conflict continues in Syria. It will not be lost on Russia that if some sort of deal is done allowing Iranian oil back on to the market, prices will fall and its own oil-dependent economy will be in jeopardy. And what of Assad? Will he not be strengthened by this deal? It hardly seems likely. The rebels are still as near to the centre of Damascus as they were on Aug 21. They still control large parts of the country. . . .

Down deep, Barack Obama is a pacifist. In his seminal book, “Dreams from My Father”—which discusses almost every aspect of his life, and sets forth his core beliefs—there is no hint of any militarism or global ambitions.

Because Obama has hated Apartheid in South Africa and British imperialism with a passion—and he made this crystal clear in his book, and by getting rid of the bust of Winston Churchill as one of his first acts as president—one can understand why he has drawn back from any strikes against Syria or confrontation with Iran.

He will not “carry water” for Benjamin Netanyahu because, on some level, he views the Israeli leader with the same disdain that Putin enjoys. Also, Obama hates the Israeli Apartheid and oppression of the Palestinians.

It is doubtful that Obama will ever intervene militarily in Syria, or Iran, because the American people do not want to be involved in any more wars in the Middle East. Obama understands this, which is consistent with his own innate pacifism.

Most Americans are “America-centric,” and only care about what is in the best interests of the United States. They do not have any allegiance to another country—especially Israel.

Next, Spencer’s observation is worth repeating:

There is little evidence, to me, that by the time Mr Putin does eventually retire, he will have restored Russia’s place in the world. Much more likely, that his macho posturing will be seen to have obscured Russia’s continuing decline, and prevented action to prevent it.

Amen!

Lastly, America’s attention has shifted to the Pacific, and rightly so. China is our greatest threat in the future, with Russia and North Korea behind it—not the Middle East.

This is the title of an article by Ambrose Evans-Pritchard, the UK Telegraph‘s International Business Editor, which observes:

Chinese leader Xi Jinping is to unveil sweeping economic reforms at the Party’s Third Plenum next month, with an assault on the state behemoths and the Party patronage machine (really?).

Yet he also wants to tighten the grip of the one-party, one-ideology, authoritarian state. . . .

The Development Research Centre has published its road map of reform measures. It is being taken very seriously since it is written by none other than reformer Liu Wei and by President Xi’s right-hand man on economic affairs, Liu He.

The problem is that these proposals skirt over/contradict the core finding of a joint DRC-World Bank report last year. It said China would not succeed in jumping to the next stage of economic development and would languish in the the “middle income trap” unless it embraces the whole package of modern free thinking. It did not quite say democracy, but that is what it meant.

The 2012 report warned that China risks hitting an invisible ceiling just like Latin America and the Middle East after their catch-up growth spurts in the 1960s and 1970s, failing to join the rarer “breakout” states such as Japan and Korea. “If countries cannot increase productivity through innovation, they find themselves trapped. China does not have to endure this fate,” it said.

All the arguments are by now well known. China is running out of cheap labour from the countryside. The DRC report said it faces a “wrenching demographic change” as the old-age dependency ratio doubles to north European levels within 20 years.

It then went on to say that China has picked the low-hanging fruit of cheap-labour, investment-led, export-led, catch-up growth. It can longer rely on imported technology to keep growth humming. (It has averaged just under 10pc since Deng Xiaoping began to throw open the economy in 1978.) “China has reached another turning point in its development path when a second strategic, and no less fundamental, shift is called for,” it said.

As I reported at the time, the DRC said China’s growth will slow to 7pc later this decade and 5pc by the late 2020s even if China embraces deep reform. Stagnation lies in wait if it clings to the dirigiste model. “The forces supporting China’s continued rapid progress are gradually fading. The government’s dominance in key sectors, while earlier an advantage, is in the future likely to act as a constraint on creativity,” it said. “The role of the private sector is critical because innovation at the technology frontier is quite different in nature from catching up technologically. It is not something that can be achieved through government planning.”

Xi Jinping seems to think he can dispense with half of this, cherry-picking the bits of reform that he thinks will generate growth while clamping down on the press, the internet, free science, and reviving Maoist “self-criticism” sessions to tighten control over the party. The Leninist reflexes are plain to see. This week’s treatment of the Guangzhou Express journalist—made to utter absurdities in a staged-TV confession with police watching, and the judicial process be damned—has Cultural Revolution all over it.

Surely something must give: either the Party gives up more social and political control to let that “creativity” flourish; or the reforms will degenerate into meaningless incantations and rhetoric, leaving China in the middle income trap.

We are at the moment when China has to decide. Watch the Third Plenum very closely.

Chinese state-run media revealed for the first time this week that Beijing’s nuclear submarines can attack American cities as a means to counterbalance U.S. nuclear deterrence in the Pacific.

On Monday, leading media outlets including China Central TV, the People’s Daily, the Global Times, the PLA Daily, the China Youth Daily and the Guangmin Daily ran identical, top-headlined reports about the “awesomeness” of the People’s Liberation Army navy’s strategic submarine force.

“This is the first time in 42 years since the establishment of our navy’s strategic submarine force that we reveal on such a large scale the secrets of our first-generation underwater nuclear force,” the Global Times said in a lengthy article titled “China for the First Time Possesses Effective Underwater Nuclear Deterrence against the United States.”

The article features 30 photos and graphics detailing, among other things, damage projections for Seattle and Los Angeles after being hit by Chinese nuclear warheads and the deadly radiation that would spread all the way to Chicago.

China’s sub fleet is reportedly the world’s second-largest, with about 70 vessels. About 10 are nuclear-powered, and four or more of those are nuclear ballistic submarines capable of launching missiles.

Heavily influenced by Soviet naval models that stressed underwater forces, China’s nuclear submarine development began with the reverse-engineering of a Soviet Golf-class conventional-powered sub in the 1950s.

In the 1980s, China developed its first ballistic missile sub, the Type 092 Xia-class, which has 12 launch tubes for the Julang (Giant Wave)-1 missiles. The JL-1 had a limited range and failed multiple test launches.

In 2010, a new class of missile sub, the Type 094 Jin class, entered the service. It is capable of launching 12 to 16 JL-2 missiles with a range of about 8,700 miles, covering much of the continental U.S. with single or multiple, independently targetable re-entry vehicle warheads.

Chinese calculations for nuclear attacks on the U.S. are chillingly macabre.

“Because the Midwest states of the U.S. are sparsely populated, in order to increase the lethality, [our] nuclear attacks should mainly target the key cities on the West Coast of the United States, such as Seattle, Los Angeles, San Francisco and San Diego,” the Global Times said.

“The 12 JL-2 nuclear warheads carried by one single Type 094 SSBN can kill and wound 5 million to 12 million Americans,” the Global Times reported.

China also has developed land-based intercontinental ballistic missiles—notably the DF-31A, which has a range of 7,000 to 7,500 miles.

“If we launch our DF 31A ICBMs over the North Pole, we can easily destroy a whole list of metropolises on the East Coast and the New England region of the U.S., including Annapolis, Philadelphia, New York, Boston, Portland, Baltimore and Norfolk, whose population accounts for about one-eighth of America’s total residents,” the Global Times said.

All the state-run press reports stressed the point that the PLA’s missile submarines are now on routine strategic patrol, “which means that China for the first time has acquired the strategic deterrence and second strike capability against the United States.”

“Our JL-2 SLBMs have become the fourth type of Chinese nuclear missiles that threaten the continental United States, after our DF-31A, DF-5A and DF-5B ICBMs,” said the Global Times.

This is the title of an article by the Washington Post‘s Charles Krauthammer, which states:

Three crises, one president, many bewildered friends.

The first crisis, barely noticed here, is Ukraine’s sudden turn away from Europe and back to the Russian embrace.

After years of negotiations for a major trading agreement with the European Union, Ukraine succumbed to characteristically blunt and brutal economic threats from Russia and abruptly walked away. Ukraine is instead considering joining the Moscow-centered Customs Union with Russia’s fellow dictatorships Belarus and Kazakhstan.

This is no trivial matter. Ukraine is not just the largest European country, it’s the linchpin for Vladimir Putin’s dream of a renewed imperial Russia, hegemonic in its neighborhood and rolling back the quarter-century advancement of the “Europe whole and free” bequeathed by America’s victory in the Cold War.

The U.S. response? Almost imperceptible. As with Iran’s ruthlessly crushed Green Revolution of 2009, the hundreds of thousands of protesters who’ve turned out to reverse this betrayal of Ukrainian independence have found no voice in Washington. Can’t this administration even rhetorically support those seeking a democratic future, as we did during Ukraine’s Orange Revolution of 2004?

A Post online headline explains: “With Russia in mind, U.S. takes cautious approach on Ukraine unrest.” We must not offend Putin. We must not jeopardize Obama’s precious “reset,” a farce that has yielded nothing but the well-earned distrust of allies such as Poland and the Czech Republic whom we wantonly undercut in a vain effort to appease Russia on missile defense.

Why not outbid Putin? We’re talking about a $10 billion to $15 billion package from Western economies with more than $30 trillion in GDP to alter the strategic balance between a free Europe and an aggressively authoritarian Russia—and prevent a barely solvent Russian kleptocracy living off oil, gas and vodka, from blackmailing its way to regional hegemony.

The second crisis is the Middle East—the collapse of confidence of U.S. allies as America romances Iran.

The Gulf Arabs are stunned at their double abandonment. In the nuclear negotiations with Iran, the U.S. has overthrown seven years of Security Council resolutions prohibiting uranium enrichment and effectively recognized Iran as a threshold nuclear state. This follows our near-abandonment of the Syrian revolution and de facto recognition of both the Assad regime and Iran’s “Shiite Crescent” of client states stretching to the Mediterranean.

Equally dumbfounded are the Israelis, now trapped by an agreement designed less to stop the Iranian nuclear program than to prevent the Israeli Air Force from stopping the Iranian nuclear program.

Neither Arab nor Israeli can quite fathom Obama’s naivete in imagining some strategic condominium with a regime that defines its very purpose as overthrowing American power and expelling it from the region.

Better diplomacy than war, say Obama’s apologists, an adolescent response implying that all diplomacy is the same, as if a diplomacy of capitulation is no different from a diplomacy of pressure.

What to do? Apply pressure. Congress should immediately pass punishing new sanctions to be implemented exactly six months hence—when the current interim accord is supposed to end—if the Iranians have not lived up to the agreement and refuse to negotiate a final deal that fully liquidates their nuclear weapons program.

The third crisis is unfolding over the East China Sea, where, in open challenge to Obama’s “pivot to Asia,” China has brazenly declared a huge expansion of its airspace into waters claimed by Japan and South Korea.

Obama’s first response—sending B-52s through that airspace without acknowledging the Chinese—was quick and firm. Japan and South Korea followed suit. But when Japan then told its civilian carriers not to comply with Chinese demands for identification, the State Department (and FAA) told U.S. air carriers to submit.

Which, of course, left the Japanese hanging. It got worse. During Vice President Biden’s visit to China, the administration buckled. Rather than insisting on a withdrawal of China’s outrageous claim, we began urging mere nonenforcement.

Again leaving our friends stunned. They need an ally, not an intermediary. Here is the U.S. again going over the heads of allies to accommodate a common adversary. We should be declaring the Chinese claim null and void, ordering our commercial airlines to join Japan in acting accordingly, and supplying them with joint military escorts if necessary.

This would not be an exercise in belligerence but a demonstration that if other countries unilaterally overturn the status quo, they will meet a firm, united, multilateral response from the West.

Led by us. From in front.

No one’s asking for a JFK-like commitment to “bear any burden” to “assure the . . . success of liberty.” Or a Reaganesque tearing down of walls. Or even a Clintonian assertion of America as the indispensable nation. America’s allies are seeking simply a reconsideration of the policy of retreat that marks this administration’s response to red-line challenges all over the world—and leaves them naked.

Barack Obama Is Gutting Our Military Forces, Which Will Affect Our National Security For Decades To Come

As I wrote more than four years ago:

International terrorism and other very real national security concerns still loom, which might produce flashpoints at any time. We have enemies who seek to destroy us—a fact that is sometimes forgotten as 9/11 recedes in our memories. While it might be attractive . . . to take a “meat ax” to the Defense Department, it would be foolhardy to gut our military precisely when it has been performing magnificently and its continued strength is needed most. America’s economic and military strength go hand in hand. Both are indispensable ingredients of our great nation’s future strength.

John Lehman, who was secretary of the Navy in the Reagan administration and a member of the 9/11 Commission, has written in the Wall Street Journal:

As we lament the lack of strategic direction in American foreign policy, it is useful to remember the classic aphorism that diplomatic power is the shadow cast by military power. The many failures and disappointments of American policy in recent years, in Iraq, Afghanistan, Egypt, Libya, North Korea, Syria, Russia and Iran are symptoms of the steady shrinkage of the shadow cast by American military power and the fading credibility and deterrence that depends on it.

Although current U.S. spending on defense adjusted for inflation has been higher than at the height of the Reagan administration, it has been producing less than half of the forces and capabilities of those years. Instead of a 600-ship Navy, we now have a 280-ship Navy, although the world’s seas have not shrunk and our global dependence has grown. Instead of Reagan’s 20-division Army, we have only 10-division equivalents. The Air Force has fewer than half the number of fighters and bombers it had 30 years ago.

Apologists for the shrinkage argue that today’s ships and aircraft are far more capable than those of the ’80s and ’90s. That is as true as “you can keep your health insurance.”

While today’s LCSs—the littoral-class ships that operate close to shore—have their uses, they are far less capable than the Perry-class frigates that they replace. Our newest Aegis ships have been upgraded to keep pace with the newest potential missile threats, but their capability against modern submarines has slipped.

Air Force fighter planes today average 28 years old. Although they have been upgraded to keep pace with the latest aircraft of their potential adversaries, they have no greater relative advantage than they had when they were new. There are merely far fewer of them in relation to the potential threat. In deterrence, quantity has a quality all its own.

There is one great numerical advantage the U.S. has against potential adversaries, however. That is the size of our defense bureaucracy. While the fighting forces have steadily shrunk by more than half since the early 1990s, the civilian and uniformed bureaucracy has more than doubled. According to the latest figures, there are currently more than 1,500,000 full-time civilian employees in the Defense Department—800,000 civil servants and 700,000 contract employees. Today, more than half of our active-duty servicemen and women serve in offices on staffs. The number of various Joint Task Force staffs, for instance, has grown since 1987 from seven to more than 250, according to the Defense Business Board.

The constant growth of the bureaucracy has resulted from reform initiatives from Congress and by executive order, each of which established a new office or expanded an existing one. These new layers have accumulated every year since the founding of the Department of Defense in 1947. Unlike private businesses—disciplined by the market—which require constant pruning and overhead reduction to stay profitable, each expansion of the bureaucracy is, to paraphrase President Reagan, the nearest thing to eternal life to be found on earth.

The Pentagon, like Marley’s ghost, must drag this ever-growing burden of chains without relief. As a result something close to paralysis is approaching. The suffocating bloat of overstaffing in an overly centralized web of bureaucracies drives runaway cost growth in weapons systems great and small. Whereas the immensely complex Polaris missile and submarine system took four years from a draft requirement until its first operational patrol in February 1960, today the average time for all weapons procured under Defense Department acquisition regulations is 22 years.

The latest Government Accountability Office report, released in October, estimates that there is $411 billion of unfunded cost growth in current Pentagon programs, almost as much as the entire 10 years of sequester cuts if they continue. The result has been unilateral disarmament.

What is to be done? As with most great issues, the solution is simple, the execution difficult. First, Secretary of Defense Chuck Hagel must be supported in his announced intention to cut the bureaucracy of uniformed and civilian by at least 20%. Each 7,000 civilian reductions saves at least $5 billion over five years. Second, clear lines of authority and accountability, now dissipated through many bureaucratic entities, must be restored to a defined hierarchy of human beings with names. Third, real competition for production contracts must be re-established as the rule not the exception. Fourth, weapons programs must be designed to meet an established cost and canceled if they begin to exceed it.

While sequester is an act of desperation that adds more uncertainty to an already dysfunctional system, it does seem to be acting as a spur to focus Congress on the urgent need to stop our unilateral disarmament by making deep cuts in bureaucratic overhead throughout the Pentagon, uniformed and civilian.

The way forward for Republicans is not to default to their traditional solution, which is simply to fight sequester cuts and increase the defense budget. Instead, Republicans should concentrate on slashing and restructuring our dysfunctional and bloated defense bureaucracy. With strong defense chairmen on House and Senate committees already sympathetic to the overhead issue, and a willing secretary of defense, this Congress can do it. That will place the blame for the consequences of sequester and the earlier $500 billion Obama cuts squarely where it belongs, on the president and the Democrats.

The way will thereby be prepared for Republican victory in the 2016 elections based on a Reagan-like rebuilding mandate that can actually be carried out by a newly streamlined and more agile Defense Department.

I respectfully disagree with Lehman. Obama and Hagel seek to gut our military, not make it more efficient. The Pentagon has always been bureaucratic. In fact, it is the only portion of American government that functions effectively and relatively efficiently. It must be strengthened; and we must stop Obama’s unilateral disarmament.

Obamacare is destroying our national health care system—or one-sixth of the American economy. Obama must not be allowed to destroy the U.S. military. Our very survival depends on it!

The Obama administration’s ballyhooed military “pivot” to Asia is running into some frank talk from the top U.S. commander in the Pacific.

Three years after the Pentagon said it was de-emphasizing Europe in favor of the Asia-Pacific region, Navy Adm. Samuel J. Locklear III said this week that U.S. dominance has weakened in the shadow of a more aggressive China.

“Our historic dominance that most of us in this room have enjoyed is diminishing, no question,” Adm. Locklear, chief of U.S. Pacific Command, said Wednesday at a naval conference in Virginia.

Although Adm. Locklear said it is obvious that Chinese military power is growing, he suggested that it is unclear whether China will seek to be a hard adversary to the U.S. in the long term, so Washington should be working overtime on steering Beijing toward a cooperative security posture.

“China is going to rise, we all know that,” Adm. Locklear said, as reported by Defense News, which included several quotes from his speech at the annual Surface Navy Association meeting.

“[But] how are they behaving? That is really the question,” the admiral said, adding that the Pacific Command’s goal is for China “to be a net provider of security, not a net user of security.”

His remarks offered insight into the introspection at the Pentagon’s highest levels about how the U.S. should tailor its military presence in the region, where Beijing and Moscow—regional powerhouses and former Cold War adversaries to Washington—are keen to challenge U.S. dominance.

“The problem with this formulation is, for whom does Adm. Locklear think China will be providing security?” said Dean Cheng, an analyst at the Heritage Foundation. “The implicit answer is ‘to everyone,’ because the assumption is that we can somehow mold China into being ourselves—that China will see its interests as somehow congruent and coincident with those of the United States, and therefore China will assume the mantle of regional provider of public goods.

“But this is a remarkable assumption, especially in light of recent Chinese behavior. China is not interested in providing security for everyone and, frankly, not even for anyone other than itself. This is the kind of bizarre lens that led one of Adm. Locklear’s predecessors to offer to help China with its carrier development.”

In the Global Times story, Jin Canrong, a deputy dean of the School of International Studies at Renmin University of China, said the American admiral’s comments recognize China as a rising military power.

“However, some people, who sit in their offices in Washington, tend to hold a more hard-line position toward China,” Mr. Jin said.

China has focused its attention and actions almost exclusively on its naval and air power over waterways in its immediate vicinity.

Much of Beijing’s posturing has been within the context of territorial disputes with longtime U.S. ally Japan and smaller Pacific nations over patches of islands in the South and East China seas.

Beijing made global headlines in November by announcing the creation of an air defense zone in the East China Sea that requires foreign civilian and military aircraft to notify Chinese authorities of their flight plans and cargo. It triggered a weekslong Cold War-style standoff with Washington, and prompted the Pentagon to fly two B-52 bombers through the zone.

The zone’s establishment was an unprecedented move by Beijing, whose leaders have been more prone to make a show of their expanding military might.

For example, China’s Defense Ministry confirmed this week that the nation’s weapons designers recently conducted the first test of an ultra-high-speed missile vehicle, a cutting-edge technology that presumably could challenge U.S. operations in the Pacific.

The Washington Free Beacon reported Wednesday that the ministry had faxed a two-sentence statement to news agencies and state-run media in Beijing to confirm the flight test of a hypersonic glide vehicle, dubbed the WU-14 by the Pentagon.

Such developments add heat to the debate among foreign policy and national security insiders in Washington over the extent to which the U.S. is on course to respond effectively to China, or is at risk of seeing its influence rolled back in the Pacific.

“We need to think about all scenarios, not just the ones we’ve been dealing with over the last several years where we’ve enjoyed basic air superiority and basic sea superiority,” Adm. Locklear said Wednesday. “There are places in the world where in this century we won’t have them.”

Navy Rear Adm. John Kirby, Defense Secretary Chuck Hagel’s press secretary, said Thursday that the secretary is committed to a “position of strength” in the Pacific.

“The secretary understands the larger point Adm. Locklear is making concerning the relative growth in capabilities of certain states in the region,” Adm. Kirby said. “There are very real challenges we face in that part of the world, very real capabilities we need to be able to field. He also believes that America’s continued leadership and influence in the region remains vital, and he is committed, from a military perspective, to maintaining that position of strength.”

President Obama pledged on Jan. 5, 2012, that his strategy would put more military muscle in Asia.

“We will be strengthening our presence in the Asia Pacific, and budget reductions will not come at the expense of that critical region,” the president said.

As defense secretary, Leon E. Panetta declared: “The U.S. military will increase its institutional weight and focus on enhanced presence, power projection, and deterrence in Asia Pacific.”

The plan is to have about 60 percent of Navy ships dedicated to the Pacific by 2020. Of 11 active aircraft carriers, six would be committed to the region.

Critics contend that the strategic pivot is not working because the Navy fleet is shrinking while the Chinese navy expands.

Patrick Cronin, senior director of the Asia-Pacific Security Program at the Center for a New American Security in Washington, recently told The Washington Times that the U.S. is facing “a long game” when it comes to China.

Developments such as Beijing’s air defense zone may be “small tactical gambits,” Mr. Cronin said. But if the U.S. does not “respond and we don’t remain strong, then China will unilaterally redefine the region in a way that we do not recognize.”

According to the Defense News report, Adm. Locklear said Washington’s focus on the Middle East over the past 20 years has detracted from U.S. military needs in the Pacific.

“To be honest with you, the lack of urgency on the development of [a] next-generation, surface-launch, over-the-horizon cruise missile is troubling,” the admiral said. “As the PACOM commander, I need you to be thinking in the offensive: How are you going to show up? How are you going to be dominant? How are you going to be lethal?”

While the Obama administration remains deeply engaged in diplomatic strategies in the Middle East, the White House has spent several of the past five years attempting to implement a “pivot” of U.S. foreign policy toward Asia.

As part of the pivot, which officials have described as a “rebalancing,” the administration is pushing for more inclusion of smaller Pacific Rim nations in the Trans-Pacific Partnership—a wide-reaching free trade agreement that pointedly does not include China.

The administration also has thrown increased U.S. diplomatic weight behind the Association of Southeast Asian Nations as a multilateral counterweight to China’s growing geopolitical clout in the region.

But some foreign policy analysts have argued that the U.S. should be doing more to increase unilateral, military-based relations with smaller Asian nations in order to send a message to China—and to Russia—about the depth and durability of U.S. interests in the region.

The Obama administration is, in fact, pursuing that track with some in the Pacific, and evidence suggests several nations on China’s periphery are eager to embrace deeper military ties with Washington.

The Philippines, for instance, revealed this week that it seeks to purchase two more Navy ships to boost its maritime protection amid threats from China, according to a report by Agence France-Presse.

The news agency quoted the chief of staff of the Philippine armed forces, Gen. Emmanuel Bautista, as saying the ships would be paid from $40 million in military assistance that Secretary of State John F. Kerry pledged to the Philippines when he visited the nation in December.

Administration plans to reduce the number of U.S. nuclear warheads as part of the 2010 New Strategic Arms Reduction Treaty are also drawing renewed scrutiny, with a group of eight senators urging the Pentagon last month to hold off on plans to mothball 50 missile silos.

The UK Telegraph‘s International Business Editor in London, Ambrose Evans-Pritchard, has written:

China’s Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.

The balance of evidence is that [the] most powerful Chinese leader since Mao Zedong aims to prick China’s $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.

This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications. Brazil, Russia, South Africa, and the commodity bloc are already in the cross-hairs.

“China is getting serious about deleveraging,” says Patrick Legland and Wei Yao from Societe Generale. “It is difficult to gently deflate a bubble. There is a very real possibility that this slow deflation may get out of control and lead to a hard landing.”

Zhang Yichen from CITIC Capital said the denouement will be a ratchet effect since China has capital controls and banks are an arm of the state, but that does not make it benign. “They are trying to deleverage without blowing the whole thing up. The US couldn’t contain Lehman contagion, but in China all contracts can be renegotiated, so it is very hard to have a domino effect. We’ll see a slow deflating of the bubble,” he said.

What is clear is that we are dealing with a credit expansion of unprecedented scale, equal in size to the US and Japanese banking systems combined. The outcome may matter more for the world than anything that the US Federal Reserve does over coming months under Janet Yellen, well signalled in any case.

Societe Generale has defined its hard landing as a fall in Chinese growth to a trough of 2pc, with two quarters of contraction. This would cause a 30pc slide in Chinese equities, a 50pc crash in copper prices, and a drop in Brent crude to $75. “Investors are still underestimating the risk. Chinese credit and, to a lesser extent, equity markets would be very vulnerable,” said the bank.

Such an outcome—not their base case—would send a deflationary impulse through the global system. This would come on top of the delayed fall-out from China’s $5 trillion investment in plant and fixed capital last year, matching the US and Europe together, and far too much for the world economy to absorb.

The effects of this on large parts of Latin America, Africa, the Middle East, and core Eurasia would hit before offsetting benefits accrued to consumers in the West. Such commodity shocks are “asymmetric” at first. Southern Europe would fall over the edge into deflation, pushing Italy, Portugal, and Spain deeper into a debt compound trap.

China did of course blink in January when the authorities stepped in to cover the $500m liabilities of the trust fund, “Credit Equals Gold No. 1”. It is the fifth trust rescue in opaque circumstances in recent weeks. Yet it would be hasty to conclude that President Xi is backing away from his Third Plenum vows to end to the bad old ways.

The central bank (PBOC) is tightening methodically, allowing the benchmark 7-day repo rate to ratchet up by 200 basis points to 5.21pc over the last year. It drained a further $50bn from the system this week.

Its latest quarterly report has turned hawkish, even though producer prices are in steep deflation, and the M2 money supply is slowing. It complains that “reliance on debt is still rising” and that “hidden risks in the financial sphere require attention”.

Zhiwei Zhang from Nomura says China has entered a “prolonged period of policy tightening” that will push up bank lending rates by as much as 90bp this quarter, leading to a chain of defaults.

The tell-tale signs are obvious in the central bank’s handling of reverse repos and maturing bills. The yield on corporate AA 1-year bonds has jumped 272 basis points to 7.15pc since June. “We think the PBOC intends to raise the whole spectrum of interest rates to push deleveraging,” he said.

This will be a rough ride. JP Morgan’s Haibin Zhu says the shadow banking system alone has jumped from $2.4 to $7.7 trillion since 2010, and is now 84pc of GDP. To put this in perspective, the total US subprime debacle was $1.2 trillion.

Haibin Zhu says there is mounting risk of “systemic spillover”. Two thirds of the $2 trillion of wealth products must be rolled over every three months. A third of trust funds mature this year. “The liquidity stress could evolve into a full-blown credit crisis,” he said.

Officials from the International Monetary Fund say privately that total credit in China has grown by almost 100pc of GDP to 230pc, once you include exotic instruments and off-shore dollar lending. The comparable jump in Japan over the five years before the Nikkei bubble burst was less than 50pc of GDP.

The transmission channel to the global banking system is through Hong Kong and Macao. Bejing’s credit squeeze is causing a scramble for off-shore dollar credit to plug the gap. It is this that keeps global regulators awake at night, for foreign currency loans to Chinese companies have jumped from $270bn to an estimated $1.1bn since 2009.

The Bank for International Settlements says dollar loans have been growing “very rapidly and may give rise to substantial financial stability risks”, enough to send tremors across the world.

The BIS data shows that British-based banks—a broad-term, including branches of US and Mid-East outfits—are up to their necks in this. They hold a quarter of all cross-border bank exposure to China. By contrast, German, Dutch, French and other European banks have cut their share from 32pc to 14pc as they retrench to shore up capital ratios at home.

This may be why the Bank of England’s Mark Carney warned before Christmas that the “parallel banking sector in the big developing countries” now poses the greatest risk to global finance. Officials at the Bank recently showed him an unsettling report by the Hong Kong Monetary Authority on China’s off-shore loan risks.

Charlene Chu, Fitch’s China veteran and now at Autonomous in Beijing, told The Telegraph last week that these dollar debts were large enough to set off a fresh global crisis if mishandled.

Whether this unfolds depends entirely on how the world responds. One can hardly be sanguine. Raghuram Rajan, India’s rock star central bank chief, says global co-ordination has “broken down”. Turkey, Brazil, and South Africa, among others, are tightening into economic downturns to defend their currencies. Others are distracted by their own political struggles at home.

The Fed’s Janet Yellen can hardly back away from bond tapering as her first order of business, even though US data has turned soggy. She has to shake off her (unmerited) reputation as a dove. Besides, most Fed governors are on the warpath against asset bubbles.

They may be right, but bear in mind that the growth rate of America’s M2 money supply has halved over the last year. It might have contracted since April without $85bn of bond purchases by the Fed each month.

The European Central Bank is paralysed after the German constitutional court read the riot act last Friday, strongly suggesting that its bond rescue plan (OMT) is Ultra Vires and a violation of “monetary financing”.

The ECB cannot easily carry out quantitative easing to cushion a deflationary shock in the teeth of such a judgment, even if QE is a different tool. In German politics they are the same.

The decision came disguised as a referral to the European Court, but was in reality a warning shot, as former judge Udo di Fabio has more or less said. The German court cannot stop the ECB buying bonds but it can stop the Bundesbank from taking part, and must do so if actions are Ultra Vires. That is enough.

So we keep our fingers crossed as we glimpse the first foam of a deflationary Ch’ient’ang’kian coming our way from China. The world’s central banks have no margin for error.

This is the question asked by Geoff Dyer, a former Beijing bureau chief for the UK’s Financial Times, in an article subtitled “The new era of military competition in the Pacific will become the defining geopolitical contest of the 21st century”:

To the list of industries now dominated by China, there is one surprising new entry: Miss World. Beauty contests were banned in China by Mao Zedong as one of the worst forms of western decadence but their bland internationalism appeals to modern China’s desire to be included. Of the last 10 Miss World pageants, five have been held at the seaside resort of Sanya, on subtropical Hainan island, off China’s south coast. While the Miss World show is in town, the swimsuit photo shoots take place across the road, at the Sheraton Sanya Resort, which looks out on to the white sands of Yalong Bay, a crescent-shaped cove lined with palm trees. With a Ritz-Carlton on one side and a Marriott on the other, Yalong Bay is a transplant of multi­national tourism on China’s southernmost point. The resort has become hugely ­popular with prosperous Chinese families and on the day I visited, the hotel was hosting a corporate retreat for the Chinese subsidiary of Syngenta, the Switzerland-based company which sells genetically modified seeds. The hundred or so Chinese employees spent the afternoon playing games on the beach. As they enjoyed themselves, they barely looked up when a Chinese Type 054 frigate sailed casually across the bay, in plain view of the tourists. Yalong Bay, it turns out, has a double life. The brand-name hotels occupy only one half of the beach; at the other end lies China’s newest and most sophisticated naval base.

Yalong Bay is where the two sides of China’s rise now intersect: its deeply connected economy and its deep-seated instinct to challenge America—globalisation China and great-power China vying for a spot on the beach. Celebrating their success in the China market, the Syngenta employees at the Sheraton all wore T-shirts emblazoned with the English-language slogan for their event: “Step Up Together”. Yet right next door to their party was one of the most striking symbols of China’s great-power ambitions. Ideally situated for quick access to the busy sea lanes of the South China Sea, the base in Hainan is one of the principal platforms for an old-fashioned form of projecting national power: a navy that can operate well beyond a country’s coastal waters. For the past couple of decades, such power politics seemed to have been made irrelevant by the frictionless, flat world of global­isation. Yalong Bay demonstrates a different reality. It is one of the launch pads for what will be a central geopolitical tussle of the 21st century: the new era of military competition in the Pacific Ocean between China and the US.

. . .

Asia’s seas have become the principal arteries of the global economy yet two very different visions of Asia’s future are now in play. Since the defeat of Japan in 1945—and especially since the end of the cold war—the US Navy has treated the Pacific almost as a private lake. It has used that power to implement an international system in its own image, a rules-based order of free trade, freedom of navigation and, when possible, democratic government. That Pax Americana was cemented when the US and China resumed relations in 1972. The four decades since Richard Nixon met Mao Zedong have been the most stable and prosperous in Asia’s modern history. Under the agreement, the US endorsed China’s return to the family of nations and China implicitly accepted American military dominance in Asia.

This unwritten understanding between Beijing and Washington on America’s role in Asia is crumbling. China now wishes to recast the military and ­political dynamic in the region to reflect its own traditional centrality. Great powers are driven by a mixture of confidence and insecurity. China wants a return to the leadership position it has enjoyed so often in Asian history. It also frets about the security of its seaborne commerce, especially in the area it calls the “Near Seas”—the coastal waters that include the Yellow, East China and South China Seas. The Yalong Bay naval base on Hainan is one part of the strategy that China is starting to put in place to exert control over the Near Seas, pushing the US Navy ever farther out into the western Pacific. In the process, it is launching a profound challenge to the US-led order that has been the backbone of the Asian economic miracle.

For the past 20 years China has been undergoing a rapid ­military build-up, and the navy has been given pride of place. More important, China has been investing in its navy in a very specific way. American strategists sometimes talk about a Chinese “anti-navy”—a series of warships, silent submarines and precision missiles, some based on land, some at sea, which are specifically designed to keep an opposing navy as far away as possible from the mainland. The implication of the investment plan is that China is trying to prevent the US Navy from operating in large areas of the western Pacific. According to Dennis Blair, the former Pacific commander who was head of the US intelligence services early in the Obama administration: “Ninety per cent of their time is spent on thinking about new and interesting ways to sink our ships and shoot down our planes.”

China’s new navy is both an expression of power and a means to a diplomatic end. By weakening the US naval presence in the western Pacific, China hopes gradually to undermine America’s alliances with other Asian countries, notably South Korea, the Philippines and maybe even Japan. If US influence declines, China would be in a position to assume quietly a leadership position in Asia, giving it much greater sway over the rules and practices in the global economy. Through its navy, China hopes to reshape the balance of power in Asia. The naval competition in the western Pacific will set the tone for a large part of global politics in the coming decades.

While these pressures have built up quietly over the past few years, they have burst into the open in recent months, especially with the tense stand-off between China and Japan over disputed islands in the East China Sea—which the Japanese call the Senkaku and the Chinese the Diaoyu. Almost every day, Chinese aircraft fly near the islands, prompting a response from Japanese jets, while Chinese vessels also patrol near the islands, which are administered by Japan. The world’s second and third largest economies are playing a game of military chicken, with the world’s largest economy, the US, committed by treaty to defend Japan. China’s stepped-up claim over the islands is one part of its push for greater control of the surrounding seas but it is also a central part of the growing contest for influence with the US.

China’s turn to the seas is rooted in history and geography in a manner that transcends its current political system. It was from the sea that China was harassed during its “century of ­humiliation” at the hands of the west. China was one of the most prominent victims of 19th-century gunboat diplomacy, when Britain, France and other colonial powers used their naval supremacy to exercise control over Shanghai and a dozen other ports around the country. The instinct to control the surrounding seas is partly rooted in the widespread desire never to leave China so vulnerable again. “Ignoring the oceans is a historical error we committed,” says Yang Yong, a Chinese historian. “And now even in the future we will pay a price for this error.”

This besiegement looks even worse on a map. Chinese talk about the “first island chain”, a perimeter that stretches along the western Pacific from Japan in the northeast, through Taiwan, to the Philippines in the south—all allies or friends of the US. This is both a geographical barrier, in that it creates a series of channels that a superior opponent could block in order to bottle up the Chinese navy, and a political barrier controlled by countries close to Washington. Chinese strategists talk about “breaking through the thistles”: the development of a naval capability that will allow it to operate outside the first island chain.

When China looks out to sea, it also quickly sees the US. In the decades when China had little more than a coastguard, it was largely unaware that the US Navy was patrolling waters near its shores. But now that its capabilities are more advanced, it witnesses on a daily basis that the American navy is superior and operating only a few miles from many of China’s major cities. “For them, this is a major humiliation that they experience every single day,” says Chu Shulong, an academic at Tsinghua University in Beijing who spent a number of years in the Chinese military. “It is humiliating that another country can exercise so close to China’s coasts, so close to the base in Hainan. That is the reason the navy wants to do something to challenge the US.”

Anxieties about history and geography have meshed with broader concerns about economic security. One of the key turning points in China’s push to the high seas took place when it started to import oil for the first time, in 1993. By 2010, China had become the second-biggest consumer of oil, half of which is now imported. New great powers often fret that rivals could damage their economy with a blockade. For every 10 barrels of oil that China imports, more than eight travel by ship through the Strait of Malacca, the narrow sea channel between Indonesia, Malaysia and Singapore, which is patrolled by US ships. Fifteenth-century Venetians used to warn, “Whoever is the Lord of Malacca has his hand on the throat of Venice.” Hu Jintao echoed these sentiments when he warned in a 2003 speech that “certain major powers” are bent on controlling this crucial sea lane. Until now, China’s maritime security has been guaranteed largely by the US Navy. But, like aspiring great powers before it, China has been forced to confront a central geopolitical dilemma: can it rely on a rival to protect the country’s economic lifeline?

. . .

In 2005, the American writer Robert Kaplan wrote a cover story for The Atlantic entitled “How We Would Fight China”. I can remember receiving a copy in my office in Shanghai and tossing it angrily on to a pile of papers, the plastic wrapper still on the magazine. This was the high point of the debacle in Iraq and the idea of talking up a war with China at that moment seemed the height of neoconservative conceit. But when I did eventually read Kaplan’s article, I began to realise that the question he raised was a crucial one. China does not have a grand ­imperial plan to invade its neighbours, in the way the Soviets did. But in any country with a ­rapidly growing military—one that is flexing its muscles and is involved in a score of unresolved territorial disputes—there is always the risk that its leaders might be tempted by some sort of military solution, the lure of a quick win that would reorder the regional balance. If China and its neighbours all believe that the US has a credible plan for a conflict, this both deters any eventual Chinese adventurism and reduces the risk that anxious Asians will start their own arms races with Beijing. Or, as TX Hammes, the American military historian, puts it: “We need to make sure no one in the Chinese military is ­whispering in their leaders’ ears: ‘If you listen to me, we can be in Paris in just two weeks.’”

The US has not lost an aircraft carrier since the Japanese sank the Hornet in 1942. Both practically and symbolically, the aircraft carrier has been central to American power projection over the six decades during which it has dominated the Pacific. But it is those same vessels that are now potentially under threat from China’s vast new array of missiles. The loss of a carrier would be a massive psychological blow to American prestige and credibility, a naval 9/11. The mere prospect that carriers might be vulnerable could be enough to restrict their use. Even if the US Navy commanders thought their carriers would probably survive in a conflict, they might be reluctant to take the risk. As a result, the US needs a Plan B.

In the bowels of the Pentagon, that new plan has been taking shape. It is not actually described as a plan—instead, Pentagon officials call it a new “concept” for fighting wars. But it does have a name, AirSea Battle, which echoes the military doctrine from the later stages of the cold war called AirLand Battle, when the massive build-up in Soviet troops appeared to give the USSR the capacity to over-run western Europe. Many of the details about AirSea Battle remain vague. But the few indications that have been made public suggest an approach that, if pushed too far, could be a manifesto for a new cold war.

One senior Pentagon official insisted to me, “This is not an anti-China battle plan.” But when the Pentagon starts to describe the threats it is facing—long-range, precision-strike missiles that can restrict the movements of its ships, advanced submarines and expertise in cyberwar—it becomes clear that AirSea Battle is primarily about China. The hypothetical threat that the Pentagon planners outline describes accurately the precise ­strategy that China has been developing to restrict US access to the western Pacific. No wonder US military officers sometimes refer to China as “Voldemort”—in the Pentagon’s new battle plan, China is the enemy whose name they dare not speak.

Amid the military jargon there lies an idea that—if taken to its logical conclusion—is fraught with peril. In early 2012, the Pentagon released a document called “Joint Operational Access Concept” (known in the building as Joac). In the event of a ­conflict, the paper says, the US should “attack the enemy’s cyber and space” capabilities. At the same time, it should attack the enemy’s anti-access forces “in depth”. The clear implication of this advice is that, if war ever were to break out, the US should plan to launch extensive bombing raids across mainland China. China’s “anti-navy” of missile bases and surveillance equipment is based at facilities spread across the country, including in many built-up areas. The basic idea behind AirSea Battle leads to a fairly uncompromising conclusion that, in the early stages of a conflict with Beijing, the US should destroy dozens of military sites. It is the navy’s version of “shock and awe” for 21st-century Asia.

There are several reasons why this would be a dangerous way to think about a conflict with China. For a start, it is a recipe for rapid escalation. Given that two nuclear powers are involved, there should be big incentives to leave room for diplomats to try and find a way to resolve the situation. Yet, in calling for US forces to take out China’s missile batteries at an early stage, the Pentagon’s ideas could intensify any conflict quickly. The Chinese might well conclude that the US was also targeting its nuclear weapons.

Using AirSea Battle’s ideas against China is an all-or-nothing battle plan. If commanders quickly order bombing raids across China, there is little scope to create space for diplomacy. Short of complete Chinese capitulation, it is difficult to see how such a war would end.

AirSea Battle would be expensive, too. It would require the Pentagon to fast-track a lot of weapons projects, such as a new generation of stealth bomber, at a time when budgets are under pressure. It is not only the usual critics of the military-industrial complex who fear this is part of the hidden agenda of AirSea Battle. Towards the end of the cold war, the arms race ultimately bankrupted the Soviet Union before the pressures of defence spending began ­seriously to undermine the US. But if a deeper arms race were to develop between China and the US, it is not at all clear that Washington would be starting from a stronger financial footing.

Then there are the allies. Asian governments are keen on a US military that can push back against Chinese aggression and are eager to enlist US help in this regard. But some allies might balk at the prospect of a plan to attack deep into mainland China, especially if it involved launching bombing raids from their territory. Ben Schreer, an Australian military strategist, says AirSea Battle is suited to “a future Asian cold war scenario”. Rather than providing assurance, Washington’s new battle plan could easily rattle some of its friends and allies.

. . .

All these objections create one final problem with AirSea Battle: is such an approach politically viable? Given the risks, especially the chance of nuclear escalation, it is not at all clear that a US president would endorse a war plan that involved such a rolling bombing campaign. Successful deterrence relies on being able to demonstrate a military threat that is credible and realistic. Pentagon planners hope the Chinese military will be cowed by the mere thought of an American military strategy based on AirSea Battle. But, equally, the Chinese might come to see it as a one great big bluff.

At the very least, AirSea Battle concentrates the mind. It is prompting a much broader debate in the US about how to respond to the Chinese challenge. With its superiority now under threat, Washington faces a choice: it can try to retain its primacy at all costs or it can shift to a more defensive approach that is geared towards preventing another power from ever controlling the region. Deterrence is not always the same as dominance.

The US can use some of China’s own logic against it. Together with its allies, it can develop defensive arrangements that take advantage of the region’s geography and which would make it almost impossible for China to seize contested areas—and to hold on to those islands if it were to try. By making clear the high penalties that would be involved in any attempt to snatch disputed islands, it can ensure that China cannot change the region’s status quo. Such a goal would be both much cheaper to achieve and much less confrontational than planning for mainland air strikes.

The American naval historians Toshi Yoshihara and James Holmes suggest that the US partly focuses on what they call “war limited by contingent”—smaller-scale operations which prevent dramatic escalation but make life difficult for the Chinese navy. They draw the analogy of Wellington’s campaign in Spain and Portugal in 1807-14, which in military terms was a sideshow to the broader conflict with France but which Napoleon complained gave him “an ulcer”. The ­geography along the first island chain provides many strategic locations which can be used to construct small-scale facilities with missile batteries that could create havoc for a rival navy. Submarines and mines would add to the deterrent effect against any land-grabs. “The ideas that China is pursuing about denying access can work both ways,” Holmes told me. “There are many ways to give China an ulcer, which could be one of the best ways of deterring aggression before it ever happens.”

For the more pessimistic observers, the US and China are doomed to repeat the intense security competition of the cold war. John Mearsheimer, the University of Chicago scholar, argues that the rivalry could be even more volatile than with the Soviet Union because there are more potential disputes. He also says he would not be surprised if China and Japan “start shooting at each other” at some stage over the next five years.

Such bleak outcomes are not inevitable, of course—powerful economic connections narrow the space for reckless behaviour. Yet a previous era of globalisation failed to prevent the UK and Germany from going to war. Shinzo Abe, the Japanese prime minister, is not alone in comparing the current situation in Asia to Europe in 1914. Asian militaries lack the meticulous war plans that helped push Europe into conflict then but the region offered a familiar mixture of nationalism and the potential for miscalculations that can spin out of control. The western Pacific may now be the cockpit of the world economy but it is also turning into one of its most dangerous flashpoints.

The New York Sun has an editorial that is worth reading, entitled “The American Option”:

It’s one of the most consarned things we’ve ever seen. The revolution in Ukraine is being levied by a citizenry desperate to move out of the orbit of Russia and to become part of the European Union. Yet on the other side of Europe a movement is building for Great Britain to exit the Europe Union and return to English ideas of liberty. Why in the name of George Washington isn’t any American leader—the President, the Secretary of State, the chairman of the Senate Foreign Relations Committee, the leader of the opposition—why isn’t someone making the case for an American option?

These columns have been banging on this drum for years now, most recently in May, when we read a headline in the London Financial Times that said: “Obama warns Cameron that Britain would lose influence in the US if it pulls out of EU.” Mr. Obama was then publicly advising Prime Minister Cameron to try to “fix what’s broken” in the European Union rather than pull out. That amounted, we noted in our editorial, to an intervention by Mr. Obama into Britain’s domestic political situation.

That was a reference to the United Kingdom Independence Party that has been challenging Mr. Cameron’s government over Europe. The party forced Mr. Cameron to promise, in January 2013, that if the Conservatives won the next election, a referendum would be held on whether Britain should stay in the European Union. The next election is now little more than a year off, so the question gets hotter, particularly since almost every poll taken in the past year has found more people favored a British exit, or “Brixit,” as it has come to be known. Just the other week the Guardian described the referendum with the word “time bomb.”

Why should it be America’s policy to oppose this? Why should the maundering socialists of Europe be the only option for countries ambitious of freedom? Has America no longer anything—no combination of trade relationships, common language, shared heritage of liberty—to offer in the way of a new pact cementing the special relationship? Can we not think of a way to invite into such a pact other countries who share our values, maybe someday even a free Ukraine that has been tested by time and revolution?

This idea has been met with some derision. . . . The idea that in the Era of Obama, with America in retreat and with our economy hobbled by a dysfunctional system of justice and a hectoring intelligentsia . . . well, let us just say that . . . the American idea as it is now practiced would be a hard sell in Europe.

For our part, we would respond that it’s a question of leadership. Right now, our president is being urged on nearly every quarter to make threats and bluster in respect of Kiev that he has no intention of keeping. He’s like an “oh, dear” in the headlights. He couldn’t even raise a political mandate for an attack on Syria in the midst of its massacre of its own people. How is he going to make a credible threat in the back yard of the Kremlin? The Republicans themselves are hobbled by a rift between the neo-conservative heroes of the Cold War and the libertarian wing that is wary of war and expeditions.

Well, here is an opportunity for both of them. While the Democrats wage their campaign to reduce the Army of the United States to pre-World War II levels, let us engage with the ideas of liberty. Surely something can be put together that is better for the aspiring Ukrainians than the dirigisme of Brussels. Surely the Britons who are polling so consistently that they want out of the trap of the European Union need not be met with opposition from the White House. Surely America can find something to offer other than hollow threats or paeans to retreat. We’d like to think it’s a job that could unite such champions as Rand Paul, Paul Ryan, and Paul Gigot.

This is an excellent editorial. However, it flies in the face of everything that Barack Obama is and stands for.

He was raised in Hawaii and Indonesia, and only came to the American mainland when he attended Occidental College in Los Angeles. He does not believe in American exceptionalism. Rather, he believes in “global exceptionalism,” and the notion of a pan-global government, perhaps under the leadership of the United Nations.

After World War II, the United States achieved what this editorial is suggesting . . . and much of the world flourished. Obama is going in the opposite direction. He is not the American leader to achieve this. Paul Ryan is not either. After all, he could not even carry his own State for Mitt Romney in 2012.

Ironically, Romney might be the American leader whose beliefs and accomplishments come closest to emulating what this editorial is suggesting.

According to the latest Gallup polling: “Forty-two percent of Americans, on average, identified as political independents in 2013, the highest Gallup has measured since it began conducting interviews by telephone 25 years ago.”

Americans are thirsty for the type of leadership that this editorial suggests, but they are not finding it. And there is no question that the revolution in Ukraine presents considerable opportunities; the United States has a dysfunctional system of justice; Obama and his Democrats are waging their campaign to weaken our military; the EU has severe problems; the brutal Putin’s Russia is teetering economically; and China is challenging American leadership globally.

The Wall Street Journal has said essentially the same things, in an editorial entitled “Putin Declares War,” which should be read and reread:

Vladimir Putin’s Russia seized Ukraine’s Crimean peninsula by force on the weekend and now has his sights on the rest of his Slavic neighbor. The brazen aggression brings the threat of war to the heart of Europe for the first time since the end of the Cold War. The question now is what President Obama and free Europe are going to do about it.

With a swiftness and organization that suggests the plans were hatched weeks ago, Mr. Putin is moving to carve up Ukraine after Russia’s satrap in Kiev, former President Viktor Yanukovych, was deposed in a popular democratic uprising. Russian troops have invaded Ukraine’s territory and now control all border crossings, ports and airports in Crimea. The Kremlin’s rubber-stamp parliament on Saturday approved Russian military intervention anywhere in Ukraine, which is nothing less than a declaration of war. The new government in Kiev responded by putting forces on high alert.

***

This is a crisis made entirely in Moscow. Speaking the day Mr. Yanukovych fled his palace in Kiev, Mr. Putin lied to President Obama about Russia’s actions and intentions. So did his foreign minister, Sergei Lavrov, in calls with Secretary of State John Kerry. If the blitzkrieg succeeds, Russia’s assault could end Ukraine’s 22-year history as a unitary independent state. The peaceful European order that the U.S. has paid such a high price to establish after the collapse of the Soviet Union is also in danger.

Entering his 15th year in power, Mr. Putin has never concealed his ambition to recreate Russia’s regional hegemony. He has replaced Soviet Marxism with ultra-nationalism, contempt for the West and a form of crony state capitalism. He bit off chunks of Georgia in 2008 and paid no price, but Ukraine’s 46 million people and territory on the border of NATO are a bigger prize. His updated Brezhnev Doctrine seeks to entrench authoritarianism in client states and prevent them from joining free Europe.

By Saturday, it was clear that a Russian-held Crimea is only stage one. The upper house of parliament in Moscow unanimously approved the declaration of war, and thousands of pro-Russian demonstrators turned out in the industrial cities of Kharkiv and Donetsk in eastern Ukraine to demand Moscow’s protection. As in Crimea on Thursday, armed men stormed local government buildings and replaced the Ukrainian flag with Russia’s.

The eastern regions of Ukraine are Russian speaking but they voted handily for Ukrainian independence in 1991. No serious separatist movement existed there before this weekend. The local business tycoons, who run politics there, had dropped their support for Mr. Yanukovych and backed the new national government. But Kiev has limited control over military units and police, making the east a tempting target for Mr. Putin to install his own men in power.

Ukraine borders four of America’s NATO allies, who are watching closely how the U.S. and the rest of Europe respond. The U.S. has for more than two decades championed Ukraine’s independence as crucial to European security. In exchange for Kiev’s difficult decision in 1994 to hand over its nuclear weapons to Russia, the U.S., along with Britain and Moscow, promised to assure Ukraine’s territorial integrity in the so-called Budapest Memorandum. Russia is now in breach of this agreement.

Ukraine has neglected its military, spending a little over 1% of GDP on defense, and would be an underdog against Russia. But with some 150,000 soldiers and a million reserves, it wouldn’t be a pushover. The interim government in Kiev, which was appointed by the elected parliament on Thursday, needs to establish control over the chain of command and mobilize forces. Any attempt to retake Crimea would likely fail, but the imminent threat is in the east.

Mr. Putin spoke by telephone to President Obama for 90 minutes on Saturday and was bluntly honest for a change. “In case of any further spread of violence to Eastern Ukraine and Crimea, Russia retains the right to protect its interests and the Russian-speaking population of those areas,” the Kremlin said in its readout of the conversation.

A White House statement on the call said the U.S. “condemns” the Crimean takeover and called it a “breach of international law.” That will have the Kremlin quaking. The only concrete U.S. action was to suspend participation in preparations for June’s G-8 summit in Sochi. Seriously? Mr. Obama and every Western leader ought to immediately pull the plug on that junket and oust Russia from the club of democracies.

There’s more the West can do, notwithstanding the media counsel of defeat that it “has few options.” Russia today is not the isolated Soviet Union, and its leaders and oligarchs need access to Western markets and capital. All trade and banking relationships with Russia ought to be reconsidered, and the U.S. should restrict the access of Russian banks to the global financial system. Aggressive investigations and leaks about the money the oligarchs and Mr. Putin hold in Western banks might raise the pressure in the Kremlin. The U.S. should also expand the list of Russian officials on the Magnitsky Act’s American visa ban and financial assets freeze, including Mr. Putin.

The U.S. can also deploy ships from the Europe-based Sixth Fleet into the Black Sea, and send the newly commissioned George H.W. Bush aircraft carrier to the eastern Mediterranean. NATO has a “distinctive partnership” with Kiev and in 2008 promised Ukraine that it could eventually join. It’s impractical and risky to bring Ukraine in now. But the alliance should do what it can to help Ukraine and certainly boot the Russian mission, a well-known den of spies, from NATO headquarters in Brussels and shut down the useless Russia-NATO Council.

Mr. Obama and the West must act, rather than merely threaten, because it’s clear Mr. Putin believes the American President’s words can’t be taken seriously. After the 2008 invasion of Georgia, President Obama pretended the problem was Dick Cheney and tried to “reset” relations with Moscow. Mr. Putin has defied the civilized world on Syria and Mr. Obama rewarded him by making Russia a partner in phony peace talks. Mr. Putin gave NSA leaker Edward Snowden asylum over U.S. objections, and he got away with that too.

***

In the brutal world of global power politics, Ukraine is in particular a casualty of Mr. Obama’s failure to enforce his “red line” on Syria. When the leader of the world’s only superpower issues a military ultimatum and then blinks, others notice. Adversaries and allies in Asia and the Middle East will be watching President Obama’s response now. China has its eyes on Japanese islands. Iran is counting on U.S. weakness in nuclear talks.

The Ukrainians can’t be left alone to face Russia, and the Kremlin’s annexation of Crimea can’t be allowed to stand. Ukraine must remain an independent state with its current borders intact, free to follow its democratic will to join the European Union and NATO if it desires. The world is full of revisionist powers and bad actors looking to exploit the opening created by Mr. Obama’s retreat from global leadership, and Mr. Putin is the leading edge of what could quickly become a new world disorder.

Both countries have demonstrated their willingness and ability to manipulate the Internet in their own countries for political and strategic advantages. Imagine the damage they will do to the United States and the West if they control the Internet in any way.

Brendan Sasso has written for the National Journal:

The United States is planning to give up its last remaining authority over the technical management of the Internet.

The Commerce Department announced Friday that it will give the Internet Corporation for Assigned Names and Numbers (ICANN), an international nonprofit group, control over the database of names and addresses that allows computers around the world to connect to each other.

Administration officials say U.S. authority over the Internet address system was always intended to be temporary and that ultimate power should rest with the “global Internet community.”

But some fear that the Obama administration is opening the door to an Internet takeover by Russia, China, or other countries that are eager to censor speech and limit the flow of ideas.

“If the Obama Administration gives away its oversight of the Internet, it will be gone forever,” wrote Daniel Castro, a senior analyst with the Information Technology and Innovation Foundation.

Castro argued that the world “could be faced with a splintered Internet that would stifle innovation, commerce, and the free flow and diversity of ideas that are bedrock tenets of world’s biggest economic engine.”

Rep. Marsha Blackburn, a Tennessee Republican, called the announcement a “hostile step” against free speech.

“Giving up control of ICANN will allow countries like China and Russia that don’t place the same value in freedom of speech to better define how the internet looks and operates,” she said in a statement.

Critics warn that U.S. control of the domain system has been a check against the influence of authoritarian regimes over ICANN, and in turn the Internet.

But other advocacy groups, businesses, and lawmakers have praised the administration’s announcement—while also saying they plan to watch the transition closely.

The Internet was invented in the United States, and the country has always had a central role in its management. But as the Internet has grown, other countries have demanded a greater voice. Edward Snowden’s leaks about U.S. surveillance have only exacerbated that tension.

China, Russia, Iran, and dozens of other countries are already pushing for more control over the Internet through the International Telecommunications Union, a United Nations agency.

The transition to full ICANN control of the Internet’s address system won’t happen until October 2015, and even then, there likely won’t be any sudden changes. ICANN was already managing the system under a contract from the Commerce Department.

But having the ultimate authority over the domain name system was the most important leverage the United States had in debates over the operation of the Internet. It was a trump card the U.S. could play if it wanted to veto an ICANN decision or fend off an international attack on Internet freedom.

The Obama administration is keenly aware of the potential for an authoritarian regime to seize power over the Internet. ICANN will have to submit a proposal for the new management system to the National Telecommunications and Information Administration, an agency within the Commerce Department.

“I want to make clear that we will not accept a proposal that replaces the NTIA role with a government-led or an intergovernmental solution,” Larry Strickling, the head of NTIA, said Friday.

Fadi Chehadé, the president and CEO of ICANN, said he will work with governments, businesses, and nonprofits to craft a new oversight system.

“All stakeholders deserve a voice in the management and governance of this global resource as equal partners,” he said.

Verizon, AT&T, Cisco, and other business groups all issued statements applauding the administration’s move. Senate Commerce Committee Chairman Jay Rockefeller argued that the transition will help ensure the Internet remains free and open.

Sen. John Thune, the top Republican on the Commerce Committee, said he will watch the process carefully, but that he trusts “the innovators and entrepreneurs more than the bureaucrats—whether they’re in D.C. or Brussels.”

The transition will reassure the global community that the U.S. is not trying to manipulate the Internet for its own economic or strategic advantage, according to Cameron Kerry, a fellow at the Brookings Institution and the former acting Commerce secretary.

Steve DelBianco, the executive director of NetChoice, a pro-business tech group, said the U.S. was bound to eventually give up its role overseeing Internet addresses. But he said lawmakers and the Obama administration will have to ensure that ICANN will still be held accountable before handing the group the keys to the address system in 2015.

DelBianco warned that without proper safeguards, Russian President Vladimir Putin or another authoritarian leader could pressure ICANN to shut down domains that host critical content.

“That kind of freedom of expression is something that the U.S. has carefully protected,” DelBianco said in an interview. “Whatever replaces the leverage, let’s design it carefully.”

A new article entitled, “Chinese anatomy of a property boom on its last legs,” by Ambrose Evans-Pritchard—International Business Editor in London of the UK’s Telegraph—sheds further light on this subject:

So now we know what China’s biggest property developer really thinks about the Chinese housing boom.

A leaked recording of dinner speech by Vanke Group’s vice-chairman Mao Daqing more or less confirms what the bears have been saying for months. It is a dangerous bubble, and already deflating.

Prices in Beijing and Shanghai have reached the same extremes seen in Tokyo just before the Nikkei boom turned to bust, when the (quite small) Imperial Palace grounds were in theory worth more than California, and the British Embassy grounds (legacy of a good bet in the 19th Century) were worth as much as Wales.

Li Junheng from JL Warren Capital has translated his comments, which I pass on for readers.

“In 1990, Tokyo’s total land value accounts for 63.3pc of US GDP, while Hong Kong reached 66.3pc in 1997. Now, the total land value in Beijing is 61.6pc of US GDP, a dangerous level,” said Mr Mao.

“Overall, I believe that China has reached its capacity limit for new construction of residential projects. Only those coastal Tier 3/Tier 4 cities have the potential for capacity expansion.”

“I don’t see any possibility for a rise in home prices, especially in cities with large housing inventory, unless the government pushes out another few trillion. Beijing and Shanghai have already been listed among the most expensive cities in the world in terms of the medium central city property prices.”

Mr Mao said China’s house production per 1,000 head of population reached 35 in 2011. The figure is below 12 in most developed economies “even when the housing market is hot; no country has a figure of greater than 14”.

“By 2011, housing production per 1000 people reached 30 in Tier 2 cities, excluding the construction of affordable houses. A persistently high figure such as this should cause alarm,” he said.

China’s anti-corruption campaign is spreading terror through the Party cadres. They are frantically trying to offload properties in the top-end range of 40,000-50,000 yuan per square metre in case their ill-gotten wealth is exposed by spot audits.

The numbers of flats and houses for sale has suddenly doubled. “Many owners are trying to get rid of high-priced houses as soon as possible, even at the cost of deep discounts. As a result, ordinary people who want to sell homes in the secondary market must face deep price cuts,” he said.

“In China’s 27 key cities, transaction volume dropped 13pc, 21pc, 30pc year-on-year in January, February, and March respectively. We expect the trend to continue in April. The drivers behind the fall in price are credit tightening from the banks.”

“Most cities have seen an increase in the ratio of inventory to sales. Among the 27 key cities we surveyed, more than 21 have inventory exceeding 12 months, among which are 9 greater than 24 months. The supply of residential buildings is rapidly increasing month-on-month.”

Mr Mao said 42 new projects for elite homes in Beijing will be finished in 2015, hitting the market with an extra 50,000 units that “can’t possibly be digested”.

As for the demographic time-bomb, he said China will have 400m people over the age of 60 by 2033. Half the population will be on welfare by then. “If China fails to develop technology as a driving force for its economic growth, the country will be in trouble.”

So there we have it. Vanke Group say the comments do not reflect the view of the company or indeed Mr Mao—which is odd—but they do not dispute that the recording is authentic.

His words compliment recent warnings by Nomura’s Zhiwei Zhang that the problem is even worse in the smaller cities in the interior, as we reported last month:

“We believe that a sharp property market correction could lead to a systemic crisis in China, and is the biggest risk China faces in 2014. The risk is particularly high in third and fourth-tier cities, which accounted for 67pc of housing under construction in 2013,” he said.

Nomura said residential construction has jumped fivefold from 497m square metres in new floor space to 2.596m last year. Floor space per capita has reached 30 square metres, surpassing the level in Japan in 1988.

Land sales and property taxes provided 39pc of the Chinese government’s total tax revenue last year, higher than in Ireland when such “fair-weather” taxes during the boom masked the rot in public finances.

There is a huge problem in all this. The International Monetary Fund says China is running a budget deficit of 10pc of GDP once the land sales are stripped out, and has “considerably less” fiscal leeway than assumed. The state finances are not what they seem.

This does not necessarily mean that China will spiral into crisis. David Li Daokui—former adviser to the Chinese central bank—told me the nuclear trump card of the authorities is the Reserve Requirement Ratio, currently 20pc. They can inject up to $2 trillion into the banking system if need be by slashing the RRR to single figures. It was 6pc in the late 1990s.

The question is whether President Xi Jinping wishes to take his lumps now by pricking the speculative bubble and forcing capitulation—hopefully in a controlled deleveraging—or whether he will blink as his predecessor famously did in the summer of 2012 and let rip with another round of stimulus.

Blinking stores up greater trouble later. Credit has already grown to $25 trillion. Fitch says China has added the equivalent of the entire US and Japanese banking systems combined in five years.

On balance it is better for China to get the trauma over and done with sooner rather than later. But the rest of the world should be under no illusions as to what it means.

This policy decision—should President Xi stay the course—is equivalent in global scale to the decision by Fed chief Benjamin Strong to pop the US speculative bubble in 1928, causing a commodity slump that was transmitted worldwide through the dollar based currency system (Inter-War Gold Standard) and which later snowballed into something far worse.

The US was then the world’s rising creditor power, with foreign reserves above 6pc of global GDP, almost exactly the same as China’s holdings today. When China sneezes . . . you will catch a cold, wherever you are.

Did Edward Snowden’s Theft Of Classified Documents Constitute Espionage On Behalf of Russia And China?

The Wall Street Journal has a fine article on this subject by Edward Jay Epstein, which is worth reading:

Edward Snowden’s massive misappropriations of classified documents from the inner sanctum of U.S. intelligence is mainly presented by the media as a whistleblowing story. In this narrative—designed by Mr. Snowden himself—he is portrayed as a disgruntled contractor for the National Security Agency, acting alone, who heroically exposed the evils of government surveillance beginning in 2013.

The other way of looking at it—based on the number and nature of documents Mr. Snowden took, and the dates when they were taken—is that only a handful of the secrets had anything to do with domestic surveillance by the government and most were of primary value to an espionage operation.

So far, only the whistleblower version has had immense international resonance. The Washington Post and Britain’s Guardian, the newspapers that initially published the purloined documents, won the 2014 Pulitzer Prize. The journalists who assisted Mr. Snowden in this enterprise were awarded the 2014 Polk Award for national-security reporting. Former Congressman Ron Paul organized a clemency petition in February for Mr. Snowden, stating: “Thanks to one man’s courageous actions, Americans know about the truly egregious ways their government is spying on them.”

Yet others—until now not often quoted in news accounts—see Mr. Snowden as neither a hero nor a whistleblower. Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff, testified to the House Armed Services Committee on March 13, 2014, that “The vast majority of the documents that Snowden . . . exfiltrated from our highest levels of security had nothing to do with exposing government oversight of domestic activities.” Time magazine on April 3 quoted Rep. Mike Rogers (R., Mich.), the head of the House Intelligence Committee, as saying Mr. Snowden was “definitely under the influence of Russian officials.”

On June 10, 2013, Sen. Dianne Feinstein (D., Calif.), the head of the Senate Intelligence Committee, described Mr. Snowden’s theft of documents as “an act of treason.” A former member of President Obama’s cabinet went even further, suggesting to me off the record in March this year that there are only three possible explanations for the Snowden heist: 1) It was a Russian espionage operation; 2) It was a Chinese espionage operation, or 3) It was a joint Sino-Russian operation.

Mr. Snowden’s critics regard the whistleblowing narrative as at best incomplete, at worst fodder for the naïve. They do not believe that it explains the unprecedented size and complexity of the penetration of NSA files and records. For one thing, many of his critics have intelligence clearance. They have been privy to the results of an NSA investigation that established the chronology of the copying of 1.7 million documents that were stolen from the Signals Intelligence Center in Hawaii. The documents were taken from at least 24 supersecret compartments that stored them on computers, each of which required a password that a perpetrator had to steal or borrow, or forge an encryption key to bypass.

Once Mr. Snowden breached security at the Hawaii facility, in mid-April of 2013, he planted robotic programs called “spiders” to “scrape” specifically targeted documents. According to Gen. Dempsey, “The vast majority of those [stolen documents] were related to our military capabilities, operations, tactics, techniques and procedures.”

Rick Ledgett, the NSA executive who headed the NSA’s damage-assessment task force, said on the Dec. 13, 2013, edition of “60 Minutes” that this data contains “the keys to the kingdom.” Keys, he told the CBS show, that could provide “adversaries with a road map of what we know, what we don’t know.” Many of the documents concerned secret operations against the cyber capabilities of adversaries. But only a minute fraction of them have anything to do with civil liberties or whistleblowing, former NSA Director Keith Alexander says in the Australian Financial Review published May 8.

The chronology of Mr. Snowden’s thefts suggests that a top priority was lists of the computers of U.S. adversaries abroad that the NSA had succeeded in penetrating. Mr. Snowden confirmed this priority in October 2013, when he told James Risen of the New York Times that his “last job” at the NSA—the job he took on March 15, 2013, with outside contractor Booz Allen Hamilton—gave him, as Mr. Snowden said, “access to every target, every active operation” mounted by the NSA against the Chinese. Soon after Mr. Snowden fled to Hong Kong in May 2013, he told Lana Lam of the South China Morning Post that his new job gave him access to the lists of machines in China, Hong Kong and elsewhere that “the NSA hacked. That is why I accepted that position about three months ago.”

Mr. Snowden took the Booz Allen Hamilton job in March of 2013, but it was only at the tail end of his operation—in May—that he copied the document (possibly the only one) that specifically authorized the NSA’s controversial domestic surveillance program. This was a Foreign Surveillance Intelligence Act court order, instructing Verizon to provide metadata on U.S. phone calls for 90 days, that Mr. Snowden gave to the Guardian newspaper in London on June 3, 2013. (He also leaked a secret presentation in slides about the NSA’s Prism Internet surveillance. This program, operated with the FBI, targeted only foreigners, though it could be extended, with the approval of the attorney general, to suspects in the U.S. in contact with foreign targets.)

Contrary to Mr. Snowden’s account, the document he stole about the NSA’s domestic surveillance couldn’t have been part of any whistleblowing plan when he transferred to Booz Allen Hamilton in March of 2013. Why? Among other reasons, because the order he took was only issued by the FISA court on April 26, 2013.

The suspicions that whistleblowing was a cover for espionage by Mr. Snowden are further heightened by his winding up under the protection of the Russian security service, the FSB, in Moscow. Whether or not Mr. Snowden took the 1.7 million stolen documents to Moscow or stored them in cyberspace, the theft effectively compromises all the sources and methods in them.

What accounts for the extraordinary divide between the Snowden and anti-Snowden camps is a disparity in the available information. The pro-Snowden camp’s view is largely informed by Mr. Snowden himself. In the anti-Snowden camp are administration officials and the members of the House and Senate intelligence oversight committees who have been at least partially briefed on the continuing investigations of the Snowden affair.

In short, the media and Mr. Snowden’s admirers have only his word as to what went on. His detractors are the people who know enough about what happened to conclude that far from being a whistleblower, Mr. Snowden was a participant in an espionage operation and most likely steered from the beginning toward his massive theft, whether he knew this at first or not.

Little, if any, of this classified data has reached the public or the news media. The evidence backing up the government’s criminal complaint against Mr. Snowden—involving both espionage and the theft of government property—has been sealed since June 22, 2013. Even Mr. Snowden’s legal standing is unclear. President Obama said on Dec. 20, 2013, that he was “under indictment”—and then a spokesperson corrected the president, saying that the grand jury had not in fact indicted him.

Until there is an indictment by a federal grand jury, and the state’s evidence against Mr. Snowden is unsealed, his portrait as a crusader will persist.

This is the title of an article by the UK Telegraph‘s International Business Editor in London, Ambrose Evans-Pritchard, which states:

China’s leaders have brushed aside warnings of an incipient credit crunch in the Chinese economy, determined to purge excesses from the financial system despite falling house prices and the deepest industrial slowdown since the Lehman crisis.

Industrial production dropped 0.4pc in August from a month earlier, a rare event that highlights how quickly China is coming off the boil. The growth of fixed asset investment fell to record lows.

“It is a shockingly sharp deceleration,” said Wei Yao, from Societe Generale. “What is surprising is the calm response from Beijing. The new leadership’s tolerance for short-term pain seems to have jumped by another big notch.”

Electricity output has dropped 2.2pc over the past year as the authorities continue to force dinosaur industries into closure, chipping away at excess capacity.

New credit has fallen 40pc, and there has been an outright contraction of trust loans and undiscounted bankers acceptances over the past two months, the result of a clampdown on parts of the shadow banking nexus. “The shrinking stock of trust loans is particularly dangerous to property developers,” she said.

Fleming Nielsen, from Danske Bank, said there are signs of a “credit crunch”—albeit one engineered by regulators—with bond spreads for low grade corporate debt trading at pre-default levels. He said credit has slowed so much over recent months that it is no longer growing faster than nominal GDP, a crucial inflexion point.

The property market remains dazed, with sales down 13.4pc in August. House prices have fallen for the past five months, with the effects spreading to related industries. The output of washing machines is down 7.5pc over the past year.

Chang Chun Hua, from Nomura, said China’s central bank will have to step in to prevent overkill, predicting five successive cuts of 50 basis points in the Reserve Requirement Ratio (RRR) by the end of next year, and perhaps more radical measures if this fails to do the trick.

The RRR is still 20pc, giving the central bank huge scope for stimulus in a crisis. The rate was in the low single digits in the late 1990. Former rate-setter Li Daokui said a cut to this level today would free up $2 trillion of fresh lending.

Premier Li Keqiang has so far refused to blink, determined to drive through deep reforms and wean the economy off exorbitant levels of debt before the damage becomes irreversible. “We are restructuring instead of expanding the monetary supply,” he said last week, warning markets not to expect easy money to ignite a fresh boom this time.

Mark Williams, from Capital Economics, said the reformist regime led by Xi Jinping is willing to tolerate lower growth provided the economy continues to generate jobs, up by a record 9.7m so far this year.

Urban unemployment has remained stable near 5pc, though the latest data from Manpower showed the “employment outlook index” falling to the lowest since 2009. “As long as the labour market remains healthy, significant policy loosening is still unlikely,” said Mr Williams.

China’s workforce is already shrinking and the flow of rural migrants to the cities is slowing rapidly. It is a sign that the country may be hitting the “Lewis Point” when catch-up growth is exhausted, but it also lowers the risk of a social explosion.

The government’s tough line is a major shift in strategy. The Communist Party has until recently responded to each slowdown with a fresh blast of loans, creating ever bigger problems. The ratio of credit to GDP has doubled to 200pc of GDP in five years—or 250pc by some measures—a faster pace of growth than in any other major bubble across the world in the past 100 years.

Credit is no longer gaining traction. The extra output generated by each extra yuan of loans has collapsed from around 0.75 before the Lehman crisis to nearer 0.2 today. It is becoming increasingly dangerous, for little macro-economic benefit.

The Communist Party’s decision to rein in credit has global ramifications. The $25 trillion edifice is already as big as the US and Japanese banking systems combined. The effects of China’s industrial slowdown is a key reason why iron ore prices have crashed, and global demand for oil keeps falling far short of what was expected.

Whether Xi Jinping’s new discipline will last is an open question. The authorities have already relaxed home purchase limits in most cities, and urged banks to loosen mortgage quotas.

Junheng Li, from Warren Capital, said the real scale of horror in the construction industry is disguised by advanced payments that are simply pocketed as cash flow. “This flatters the balance sheet and understates the true leverage,” she said.

China’s “market Leninists” may find just it as difficult to deflate a housing bubble gently as Japanese and American capitalists before them.

This is the title of a Wall Street Journal essay by Bob Davis, which states:

On a trip to China in 2009, I climbed to the top of a 13-story pagoda in the industrial hub of Changzhou, not far from Shanghai, and scanned the surroundings. Construction cranes stretched across the smoggy horizon, which looked yellow in the sun. My son Daniel, who was teaching English at a local university, told me, “Yellow is the color of development.”

During my time in Beijing as a Journal reporter covering China’s economy, starting in 2011, China became the world’s No. 1 trader, surpassing the U.S., and the world’s No. 2 economy, topping Japan. Economists say it is just a matter of time until China’s GDP becomes the world’s largest.

This period also has seen China’s Communist Party name a powerful new general secretary, Xi Jinping , who pronounced himself a reformer, issued a 60-point plan to remake China’s economy and launched a campaign to cleanse the party of corruption. The purge, his admirers told me, would frighten bureaucrats, local politicians and executives of state-owned mega companies—the Holy Trinity of vested interests—into supporting Mr. Xi’s changes.

So why, on leaving China at the end of a nearly four-year assignment, am I pessimistic about the country’s economic future? When I arrived, China’s GDP was growing at nearly 10% a year, as it had been for almost 30 years—a feat unmatched in modern economic history. But growth is now decelerating toward 7%. Western business people and international economists in China warn that the government’s GDP statistics are accurate only as an indication of direction, and the direction of the Chinese economy is plainly downward. The big questions are how far and how fast.

My own reporting suggests that we are witnessing the end of the Chinese economic miracle. We are seeing just how much of China’s success depended on a debt-powered housing bubble and corruption-laced spending. The construction crane isn’t necessarily a symbol of economic vitality; it can also be a symbol of an economy run amok.

Most of the Chinese cities I visited are ringed by vast, empty apartment complexes whose outlines are visible at night only by the blinking lights on their top floors. I was particularly aware of this on trips to the so-called third- and fourth-tier cities—the 200 or so cities with populations ranging from 500,000 to several million, which Westerners rarely visit but which account for 70% of China’s residential property sales.

From my hotel window in the northeastern Chinese city of Yingkou, for example, I could see empty apartment buildings stretching for miles, with just a handful of cars driving by. It made me think of the aftermath of a neutron-bomb detonation—the structures left standing but no people in sight.

The situation has become so bad in Handan, a steel center about 300 miles south of Beijing, that a middle-aged investor, fearing that a local developer wouldn’t be able to make his promised interest payments, threatened to commit suicide in dramatic fashion last summer. After hearing similar stories of desperation, city officials reminded residents that it is illegal to jump off the tops of buildings, local investors said. Handan officials didn’t respond to requests for comment.

For the past 20 years, real estate has been a major driver of Chinese economic growth. In the late 1990s, the party finally allowed urban Chinese to own their own homes, and the economy soared. People poured their life savings into real estate. Related industries like steel, glass and home electronics grew until real estate accounted for one-fourth of China’s GDP, maybe more.

Debt paid for the boom, including borrowing by governments, developers and all manner of industries. This summer, the International Monetary Fund noted that over the past 50 years, only four countries have experienced as rapid a buildup of debt as China during the past five years. All four—Brazil, Ireland, Spain and Sweden—faced banking crises within three years of their supercharged credit growth.

China followed Japan and South Korea in using exports to pull itself out of poverty. But China’s immense scale has now become a limitation. As the world’s largest exporter, how much more growth can it count on from trade with the U.S. and especially Europe? Shift the economy toward innovation? That is the mantra of every advanced economy, but China’s rivals have a big advantage: Their societies encourage free thought and idiosyncratic beliefs.

When I talked to Chinese college students, I would ask them about their plans. Why, I wondered, in an economy with seemingly limitless potential, did so few choose to become entrepreneurs? According to researchers in the U.S. and China, engineering students at Stanford were seven times as likely as those at the most elite Chinese universities to join startups.

One interview with an environmental engineering student at Tsinghua University stuck with me. His parents grew wealthy by building companies that made shoes and water pumps. But he had no desire to follow in their footsteps—and they didn’t want him to either. Better that he work for the state, they told him: The work was more secure, and perhaps he could wind up in a government position that could help the family business.

Will Mr. Xi’s campaign reverse China’s slowdown or at least limit it? Perhaps. It follows the standard recipe of Chinese reformers: remake the financial system so that it encourages risk-taking, break up monopolies to create a bigger role for private enterprise, rely more on domestic consumption.

But even powerful Chinese leaders have trouble enforcing their will. I reported earlier this year on the government’s plan to handle one straightforward problem: reducing excess steel production in Hebei, the province that surrounds Beijing. Hebei alone produces twice as much crude steel as the U.S., but China no longer needs so much steel, to say nothing of the emissions that darken the skies over Beijing. Mr. Xi weighed in by warning local officials that they would no longer be judged simply on increasing GDP; meeting environmental goals would count too.

In late 2013, Hebei staged an event called “Operation Sunday.” Officials sent demolition squads to destroy blast furnaces, and imploding mills made great TV on the 7 p.m. news. But it turned out that the destroyed mills had long been out of production, so blowing them up didn’t affect output. Indeed, China’s steel industry is on track for record production this year.

In China, I have learned, yellow isn’t just the color of development. It is also the color of a setting sun.

David Shambaugh, director of the China Policy Program at Washington, D.C.’s George Washington University, has written in the Wall Street Journal:

This past Thursday, the National People’s Congress convened in Beijing in what has become a familiar annual ritual. Some 3,000 “elected” delegates from all over the country—ranging from colorfully clad ethnic minorities to urbane billionaires—will meet for a week to discuss the state of the nation and to engage in the pretense of political participation.

Some see this impressive gathering as a sign of the strength of the Chinese political system—but it masks serious weaknesses. Chinese politics has always had a theatrical veneer, with staged events like the congress intended to project the power and stability of the Chinese Communist Party, or CCP. Officials and citizens alike know that they are supposed to conform to these rituals, participating cheerfully and parroting back official slogans. This behavior is known in Chinese as biaotai, “declaring where one stands,” but it is little more than an act of symbolic compliance.

Despite appearances, China’s political system is badly broken, and nobody knows it better than the Communist Party itself. China’s strongman leader, Xi Jinping , is hoping that a crackdown on dissent and corruption will shore up the party’s rule. He is determined to avoid becoming the Mikhail Gorbachev of China, presiding over the party’s collapse. But instead of being the antithesis of Mr. Gorbachev, Mr. Xi may well wind up having the same effect. His despotism is severely stressing China’s system and society—and bringing it closer to a breaking point.

Predicting the demise of authoritarian regimes is a risky business. Few Western experts forecast the collapse of the Soviet Union before it occurred in 1991; the CIA missed it entirely. The downfall of Eastern Europe’s communist states two years earlier was similarly scorned as the wishful thinking of anticommunists—until it happened. The post-Soviet “color revolutions” in Georgia, Ukraine and Kyrgyzstan from 2003 to 2005, as well as the 2011 Arab Spring uprisings, all burst forth unanticipated.

China-watchers have been on high alert for telltale signs of regime decay and decline ever since the regime’s near-death experience in Tiananmen Square in 1989. Since then, several seasoned Sinologists have risked their professional reputations by asserting that the collapse of CCP rule was inevitable. Others were more cautious—myself included. But times change in China, and so must our analyses.

The endgame of Chinese communist rule has now begun, I believe, and it has progressed further than many think. We don’t know what the pathway from now until the end will look like, of course. It will probably be highly unstable and unsettled. But until the system begins to unravel in some obvious way, those inside of it will play along—thus contributing to the facade of stability.

Communist rule in China is unlikely to end quietly. A single event is unlikely to trigger a peaceful implosion of the regime. Its demise is likely to be protracted, messy and violent. I wouldn’t rule out the possibility that Mr. Xi will be deposed in a power struggle or coup d’état. With his aggressive anticorruption campaign—a focus of this week’s National People’s Congress—he is overplaying a weak hand and deeply aggravating key party, state, military and commercial constituencies.

The Chinese have a proverb, waiying, neiruan—hard on the outside, soft on the inside. Mr. Xi is a genuinely tough ruler. He exudes conviction and personal confidence. But this hard personality belies a party and political system that is extremely fragile on the inside.

Consider five telling indications of the regime’s vulnerability and the party’s systemic weaknesses.

First, China’s economic elites have one foot out the door, and they are ready to flee en masse if the system really begins to crumble. In 2014, Shanghai’s Hurun Research Institute, which studies China’s wealthy, found that 64% of the “high net worth individuals” whom it polled—393 millionaires and billionaires—were either emigrating or planning to do so. Rich Chinese are sending their children to study abroad in record numbers (in itself, an indictment of the quality of the Chinese higher-education system).

Just this week, the Journal reported, federal agents searched several Southern California locations that U.S. authorities allege are linked to “multimillion-dollar birth-tourism businesses that enabled thousands of Chinese women to travel here and return home with infants born as U.S. citizens.” Wealthy Chinese are also buying property abroad at record levels and prices, and they are parking their financial assets overseas, often in well-shielded tax havens and shell companies.

Meanwhile, Beijing is trying to extradite back to China a large number of alleged financial fugitives living abroad. When a country’s elites—many of them party members—flee in such large numbers, it is a telling sign of lack of confidence in the regime and the country’s future.

Second, since taking office in 2012, Mr. Xi has greatly intensified the political repression that has blanketed China since 2009. The targets include the press, social media, film, arts and literature, religious groups, the Internet, intellectuals, Tibetans and Uighurs, dissidents, lawyers, NGOs, university students and textbooks. The Central Committee sent a draconian order known as Document No. 9 down through the party hierarchy in 2013, ordering all units to ferret out any seeming endorsement of the West’s “universal values”—including constitutional democracy, civil society, a free press and neoliberal economics.

A more secure and confident government would not institute such a severe crackdown. It is a symptom of the party leadership’s deep anxiety and insecurity.

Third, even many regime loyalists are just going through the motions. It is hard to miss the theater of false pretense that has permeated the Chinese body politic for the past few years. Last summer, I was one of a handful of foreigners (and the only American) who attended a conference about the “China Dream,” Mr. Xi’s signature concept, at a party-affiliated think tank in Beijing. We sat through two days of mind-numbing, nonstop presentations by two dozen party scholars—but their faces were frozen, their body language was wooden, and their boredom was palpable. They feigned compliance with the party and their leader’s latest mantra. But it was evident that the propaganda had lost its power, and the emperor had no clothes.

In December, I was back in Beijing for a conference at the Central Party School, the party’s highest institution of doctrinal instruction, and once again, the country’s top officials and foreign policy experts recited their stock slogans verbatim. During lunch one day, I went to the campus bookstore—always an important stop so that I can update myself on what China’s leading cadres are being taught. Tomes on the store’s shelves ranged from Lenin’s “Selected Works” to Condoleezza Rice’s memoirs, and a table at the entrance was piled high with copies of a pamphlet by Mr. Xi on his campaign to promote the “mass line”—that is, the party’s connection to the masses. “How is this selling?” I asked the clerk. “Oh, it’s not,” she replied. “We give it away.” The size of the stack suggested it was hardly a hot item.

Fourth, the corruption that riddles the party-state and the military also pervades Chinese society as a whole. Mr. Xi’s anticorruption campaign is more sustained and severe than any previous one, but no campaign can eliminate the problem. It is stubbornly rooted in the single-party system, patron-client networks, an economy utterly lacking in transparency, a state-controlled media and the absence of the rule of law.

Moreover, Mr. Xi’s campaign is turning out to be at least as much a selective purge as an antigraft campaign. Many of its targets to date have been political clients and allies of former Chinese leader Jiang Zemin . Now 88, Mr. Jiang is still the godfather figure of Chinese politics. Going after Mr. Jiang’s patronage network while he is still alive is highly risky for Mr. Xi, particularly since Mr. Xi doesn’t seem to have brought along his own coterie of loyal clients to promote into positions of power. Another problem: Mr. Xi, a child of China’s first-generation revolutionary elites, is one of the party’s “princelings,” and his political ties largely extend to other princelings. This silver-spoon generation is widely reviled in Chinese society at large.

Finally, China’s economy—for all the Western views of it as an unstoppable juggernaut—is stuck in a series of systemic traps from which there is no easy exit. In November 2013, Mr. Xi presided over the party’s Third Plenum, which unveiled a huge package of proposed economic reforms, but so far, they are sputtering on the launchpad. Yes, consumer spending has been rising, red tape has been reduced, and some fiscal reforms have been introduced, but overall, Mr. Xi’s ambitious goals have been stillborn. The reform package challenges powerful, deeply entrenched interest groups—such as state-owned enterprises and local party cadres—and they are plainly blocking its implementation.

These five increasingly evident cracks in the regime’s control can be fixed only through political reform. Until and unless China relaxes its draconian political controls, it will never become an innovative society and a “knowledge economy”—a main goal of the Third Plenum reforms. The political system has become the primary impediment to China’s needed social and economic reforms. If Mr. Xi and party leaders don’t relax their grip, they may be summoning precisely the fate they hope to avoid.

In the decades since the collapse of the Soviet Union, the upper reaches of China’s leadership have been obsessed with the fall of its fellow communist giant. Hundreds of Chinese postmortem analyses have dissected the causes of the Soviet disintegration.

Mr. Xi’s real “China Dream” has been to avoid the Soviet nightmare. Just a few months into his tenure, he gave a telling internal speech ruing the Soviet Union’s demise and bemoaning Mr. Gorbachev’s betrayals, arguing that Moscow had lacked a “real man” to stand up to its reformist last leader. Mr. Xi’s wave of repression today is meant to be the opposite of Mr. Gorbachev’s perestroika and glasnost. Instead of opening up, Mr. Xi is doubling down on controls over dissenters, the economy and even rivals within the party.

But reaction and repression aren’t Mr. Xi’s only option. His predecessors, Jiang Zemin and Hu Jintao , drew very different lessons from the Soviet collapse. From 2000 to 2008, they instituted policies intended to open up the system with carefully limited political reforms.

They strengthened local party committees and experimented with voting for multicandidate party secretaries. They recruited more businesspeople and intellectuals into the party. They expanded party consultation with nonparty groups and made the Politburo’s proceedings more transparent. They improved feedback mechanisms within the party, implemented more meritocratic criteria for evaluation and promotion, and created a system of mandatory midcareer training for all 45 million state and party cadres. They enforced retirement requirements and rotated officials and military officers between job assignments every couple of years.

In effect, for a while Mr. Jiang and Mr. Hu sought to manage change, not to resist it. But Mr. Xi wants none of this. Since 2009 (when even the heretofore open-minded Mr. Hu changed course and started to clamp down), an increasingly anxious regime has rolled back every single one of these political reforms (with the exception of the cadre-training system). These reforms were masterminded by Mr. Jiang’s political acolyte and former vice president, Zeng Qinghong, who retired in 2008 and is now under suspicion in Mr. Xi’s anticorruption campaign—another symbol of Mr. Xi’s hostility to the measures that might ease the ills of a crumbling system.

Some experts think that Mr. Xi’s harsh tactics may actually presage a more open and reformist direction later in his term. I don’t buy it. This leader and regime see politics in zero-sum terms: Relaxing control, in their view, is a sure step toward the demise of the system and their own downfall. They also take the conspiratorial view that the U.S. is actively working to subvert Communist Party rule. None of this suggests that sweeping reforms are just around the corner.

We cannot predict when Chinese communism will collapse, but it is hard not to conclude that we are witnessing its final phase. The CCP is the world’s second-longest ruling regime (behind only North Korea), and no party can rule forever.

Looking ahead, China-watchers should keep their eyes on the regime’s instruments of control and on those assigned to use those instruments. Large numbers of citizens and party members alike are already voting with their feet and leaving the country or displaying their insincerity by pretending to comply with party dictates.

We should watch for the day when the regime’s propaganda agents and its internal security apparatus start becoming lax in enforcing the party’s writ—or when they begin to identify with dissidents, like the East German Stasi agent in the film “The Lives of Others” who came to sympathize with the targets of his spying. When human empathy starts to win out over ossified authority, the endgame of Chinese communism will really have begun.

As the author points out, the Soviet Union’s collapse came very fast; and the collapse of Putin and Russia, which are far weaker than the former USSR, is coming even faster.

Both the murderous Putin and Russia are in a death spiral that they will not survive. The economic sanctions imposed by Barack Obama, and the fall of oil prices, have been devastating Russia.

Ukraine may become “Afghanistan II”—the burial ground of Putin’s dreams of the USSR being resurrected. Russians have been leaving in body bags already, which may only increase; and the same thing is true of Putin’s “adventures” in Syria.

China has great potential; and the opportunities for shared economic and other progress with the United States are enormous. The Chinese leadership must not fritter away such a relationship. It can be win-win for both sides, stretching well into this century.

As the Middle East continues to implode, and as the United States becomes the dominant energy producer in the world once again—and energy independent—China may find that it needs American energy products desperately.

Awesome article. I think the Chinese government will further enslave the people. The Chinese people inherently tolerate slavery. The Americans are becoming drastically less and less free each year and will be only steps behind the Chinese. In fact, few Americans today even know what freedom feels like! Its only if you go to a “3rd world” nation that you can see any real freedom. Today, in the USA the governments rule your daily life. In China, I see they rule not only your life in public but also in private.

China’s stock market was swooning. Investors were panicking. Yet when Chinese President Xi Jinping spoke that first Monday in January, he didn’t address the global angst about the world’s second-largest economy.

Clad in an olive-green Mao suit, he was talking instead to Chinese troops about another challenge that consumes his time and political capital: the biggest restructuring of the People’s Liberation Army since the 1950s, a plan that unnerves America and its Asian allies and could upset the global balance of power.

“We must emancipate our minds and change with the times,” he told troops of the 13th Group Army on Jan. 4. They should not, he said, “wear new shoes to walk the old road.”

Four days earlier, Mr. Xi had started to implement a plan to transform the Soviet-modelled military, long focused on defending China from invasion, into a smaller, modern force capable of projecting power far from its shores.

The plan, to be implemented by 2020, is one of Mr. Xi’s most ambitious and politically risky undertakings yet.

If it succeeds, it could lay the ground for China to conduct combat operations as far afield as the Middle East and Africa. That would mark a milestone in the nation’s emergence from a period of isolationism that began under the Ming Dynasty in the 15th century.

It could enable China not just to challenge U.S. military dominance in Asia, but also to intervene militarily elsewhere to protect its shipping lanes, resource supplies and expatriates, as other world powers have. While an expeditionary Chinese military could help in humanitarian and counterterror operations, the concern for the U.S. and its allies is that Beijing might use force in ways that conflict with Western interests.

The challenge for Mr. Xi is that his overhaul strikes at the core of one of China’s most powerful interest groups, an institution that swept the Communist Party to power in 1949 and enforced its rule against Tiananmen Square’s pro-democracy protests 40 years later.

The president’s plan is “much more complex and disruptive than previous military reforms, which just tinkered within the existing system,” said Yue Gang, a retired PLA colonel and military analyst.

“If the reforms fail, you could lose popularity and have to take responsibility and resign, so there’s a big political risk,” he said in an unusually stark warning from a Chinese military figure about the high stakes involved.

China’s State Council Information Office, the government’s official mouthpiece, referred inquiries to the defense ministry, which responded in a faxed statement saying The Wall Street Journal’s queries contained “pure speculation and did not correspond to facts” without specifying what points were inaccurate. The ministry said military and civilian authorities had done “intensive studies” to “ensure the smooth transition from the old system to the new one and also the security and stability of the troops.”

The PLA had begun taking tentative steps abroad even before Mr. Xi’s plan. It has sent ships and submarines into the Pacific and Indian Oceans, installed military equipment on reclaimed land in the South China Sea and challenged U.S. naval forces around China’s coast.

Internally, though, the PLA has been hobbled by a structure and mind-set rooted in the revolution and dominated by the Army, which before the overhaul accounted for some 70% of troops and seven of 11 officers on the Central Military Commission that commands China’s armed forces.

Interests abroad

Under his new plan, Mr. Xi, who heads that commission, is trying to shift power to naval, air and missile forces, which are vital for his ambitions to enforce territorial claims in Asia and protect China’s swelling economic interests elsewhere. He is doing that by forming new service branches and downgrading the status of the Army.

He is wresting power from senior generals by dismantling command structures including the PLA’s seven “Military Regions” and four “General Departments,” through which its officers have for years wielded authority, resisted central oversight and sometimes lined their pockets.

He is taking direct command of combat operations: Official media named him for the first time as “commander-in-chief” of a new joint battle command center that he visited on Wednesday in a rare appearance in camouflage fatigues and combat boots.

And he is trimming 300,000 of the PLA’s 2.3 million troops, a move he announced last year, the biggest cut in two decades. That means putting out of work large numbers of soldiers experienced with weapons, just as the state sector, which absorbed previous troops cuts, also plans to lay off millions.

The cuts add to a pool of at least six million PLA veterans, thousands of whom have joined well organized protests in recent years, including one last June outside Central Military Commission offices in Beijing, over what they see as insufficient government support.

The government has ordered state firms to reserve 5% of new jobs for veterans and pledged at a March parliament meeting to spend 39.8 billion yuan ($6.1 billion) this year on allowances for demobilized troops, a 13% increase over 2015. Premier Li Keqiang told parliament: “We will see that demobilized military personnel are settled into new jobs or have good access to employment and business startup services.”

China’s restrictive political system makes it hard for the plan’s opponents to speak freely. Top military figures have warned officers in speeches not to express opinions on the subject.

Still, there are signs of dissent. The PLA Daily, the main military newspaper, in November posted online and then removed an article warning that if restructuring is “not done properly, this could affect the stability of the military or even all of society.”

Retired Maj. General Wang Hongguang, a former deputy head of one of China’s military regions, told reporters at the March parliament meeting that local authorities can’t afford to support all the demobilized soldiers. “This is hundreds of billions” of yuan, he said, adding that the defense budget needed to increase by more than 10%. The next day, the government announced a 7.6 % increase, the lowest in six years.

Mr. Xi’s ultimate goal is to enable the PLA to conduct complex joint operations combining air, sea and ground forces with information technology—the kind of operation the U.S. has pioneered.

Reagan-era echoes

His plan echoes the Reagan-era Goldwater-Nichols Act of 1986, which revamped the U.S. military to address the inter-services rivalry and insufficient civilian control exposed during the Vietnam War and 1983 Grenada invasion. Despite fierce institutional resistance, it cut American forces and reduced powers of the heads of the Army, Navy, Air Force and Marines. It bolstered the authority of regional commanders to oversee all services in combat. That “joint operations” approach means commanders can mobilize whatever air, navy or other forces they need when trouble arises.

Chinese leaders have hankered after similar capabilities since observing the 1991 Gulf War, when U.S. leaders coordinated a complex array of forces to devastating effect, say Chinese officers and military historians. Mr. Xi has indicated he sees a comparable capability as essential to the “China Dream” he outlined after taking power in 2012, when he ordered the military to prepare to “fight and win wars.”

A defense white paper last year gave the PLA a new strategic task to “safeguard the security of China’s overseas interests” on top of its traditional defensive duties. Beijing has since announced plans to build its first overseas military outpost, in the African nation of Djibouti, which is home to U.S. and Japanese bases and has served as a supply stop for Chinese naval ships on antipiracy patrols in the Gulf of Aden. The PLA has also established an Overseas Operations Office as part of its overhaul.

China must adapt to a “global revolution” in warfare as threats to its expanding interests intensify, said Maj. Gen. Chen Zhou, a top PLA strategist who led the government white-paper team, in a group interview in March. He cited the Chinese navy’s evacuation of Chinese citizens last year from Yemen, in the midst of a civil war, as an example.

Restructuring and finding jobs for 300,000 troops is an unprecedented challenge, he said. But “any revolution has a price to pay.”

Mr. Xi first must strengthen his control over the military, which has long been a rival power center to China’s civilian leadership. Founded in 1927, the PLA formed the backbone of the Communist uprising that ushered Mao Zedong into power in 1949. For years afterward, military officers were central in Party leadership.

When Deng Xiaoping came to power in 1978, he started sidelining the military from politics, winning support by letting it build business empires spanning nightclubs, pharmaceuticals and real estate.

By the 1990s, though, Beijing worried about the military’s readiness, especially after a 1996 standoff with the U.S. over Taiwan. In 1998, then-President Jiang Zemin started crowbarring the PLA out of business, extending budget increases in return.

His successor, Hu Jintao, struggled to stamp his authority over the PLA. In 2011, U.S. officials said President Hu seemed unaware of a provocative test flight of China’s new stealth fighter hours before meeting Robert Gates, U.S. Defense Secretary at the time.

Corruption was also becoming endemic, especially the buying and selling of ranks, with a generalship costing at least 10 million yuan ($1.5 million) but generating far more through graft, according to Chinese officers.

Eliminating fiefs

Mr. Xi, son of a famous revolutionary commander, came to power in 2012 making clear he was determined to clean up the PLA and reaffirm Mao’s maxim, “The Party commands the gun.”

His main weapon has been a nationwide anticorruption drive. At least 41 serving generals have been detained or convicted since 2013. So widespread was corruption that evidence from investigations now acts as a “Sword of Damocles hanging over any officer foolish enough to question” Mr. Xi’s plans, said James Mulvenon, a Chinese military expert at Defense Group Inc., a Virginia-based research firm.

As part of his plan, Mr. Xi on Jan. 11 dissolved the four main PLA General Departments—political, general staff, armaments, logistics—that top generals ran like personal fiefs. Replacing them are 15 less-powerful offices under the Central Military Commission’s direct control, letting Mr. Xi oversee everything from procurement to intelligence.

On Feb. 1, he scrapped China’s seven Military Regions, which the PLA operated like mini-states with their own schools, hospitals, hotels and newspapers, many of them moneymaking. The regions resisted central supervision and focused more on internal management than preparing for combat.

He moved to cut noncombat roles, shutting the newspapers in January. Several acrobatic, operatic, theatrical and song-and-dance troupes the PLA established in the 1930s to spread propaganda—and which have been a source of corruption—are being merged and reduced in size.

The seven regions were replaced with five new “Theater Commands,” designed to have more fluid boundaries and focus more on projecting power outward, according to military insiders. Each command’s head will have more-direct operational control of all air, naval, ground and conventional missile forces in its area, much like heads of U.S. regional commands, experts said.

“This should improve response time and effectiveness,” said Phillip Saunders, a PLA expert at the U.S. National Defense University. “They’ve looked at how the U.S. has fought and see a lot of advantages to this ‘joint’ kind of concept,” adding that it took the U.S. 15 to 20 years “to really get it right.”

Mr. Xi appears to have made some compromises, appointing Army officers to head all the new Theater Commands, although further personnel changes are likely in the coming months.

To reduce the Army’s authority, Mr. Xi has established a new Army General Command handling only ground forces, a Rocket Force overseeing missiles, and a Strategic Support Force combining capabilities in space, cyber and electronic warfare. Most of those areas were previously under Army control.

That puts the Army, which had higher status than other services, on more-equal footing, giving the others more say over budgets and operations. Ground forces are expected to account for many of the troop reductions.

Some officers support Mr. Xi’s changes, especially combat-operations leaders frustrated by graft, said people who have spoken to senior PLA figures.

Resentment, they said, comes from generals who controlled large budgets and are reduced to running relatively lowly offices. Senior officers find it harder to supplement salaries with other, sometimes illicit, activities and have lost perks such as luxury cars.

“Some senior officers might feel: ‘I used to be a commander, I’m a general, I controlled a military region,’ ” said Gen. Xu Guangyu, a former vice president of the PLA Defense Institute who held a senior post in the general staff department, “‘but after these cuts, I don’t command anyone.’”

Twice in the past year, sudden drops in the value of the yuan have rattled global markets, sparking concerns that a deeper decline was at hand as officials struggle to orchestrate an economic “soft landing” following years of debt-fueled growth.

Since then, the People’s Bank of China has calmed the waters by improving communications and the government has increased stimulus in a bid to stabilize growth. The Federal Reserve’s decision to delay rate increases has kept a lid on the value of the U.S. dollar, relieving some of the pressure on the yuan.

Yet in a refrain familiar by now to investors the world over, analysts are worrying that stimulus alone won’t be enough to get China’s growth back on track and support the yuan indefinitely. Fundamental indicators of Chinese economic health continue to deteriorate, a sign to skeptics that the currency remains overvalued and a reminder of the challenges facing the world’s second-largest economy.

“China has done a good job in anchoring market expectations and using all the tools in its policy toolbox to stabilize the economy, but it hasn’t fixed the underlying problems,” said David Loevinger, a managing director at TCW Group, which has $194.6 billion of assets under management.

Since its devaluation in August 2015, the yuan has depreciated 6.9% against the dollar, less than the British pound and the Mexican peso. After losing about $800 billion of its foreign reserves, China has managed recently to slow capital flight.

But the stability came “at the cost of delaying reforms,” said Hung Tran, executive managing director at the Institute of International Finance. To sustain growth, China has postponed overhauls of its state-owned enterprises, many of which are plagued by overcapacity and bad debt.

Private fixed-asset investment in June and July registered back-to-back monthly declines from year-earlier levels, the first time that happened since at least 2012.

It’s “a sign of business confidence falling, and people worry that adding more credit is no longer efficient,” said Claire Dissaux, an economist with Millennium Global Investments Ltd.

The retreat reflects in part the costs of China’s rapid debt buildup since the financial crisis.

The country’s total debt has climbed to 298% of its gross domestic product from 274% a year ago, according to the IIF. Rapidly rising debt tends to be associated with slowing growth, as risks of capital misallocation and default increase.

Signs abound that consumers and businesses are bracing for further devaluation. Some Chinese exporters have been hoarding dollars and keeping their earnings overseas, a move that analysts say could limit foreign-currency inflows and leave banks short of funds to lend out.

Outside the country, investors are hesitant to sink money into Chinese bonds and other yuan-denominated assets despite the government’s efforts to lure foreign capital. Chinese government bonds boast much higher yields than their Western counterparts.

“Depreciation remains a big worry for a lot of people,” said Larry Hu, China economist at Macquarie Securities, a Sydney-based investment bank.

In recent months, China’s exchange-rate maneuvering has largely been driven by the dollar. When the greenback is weak, the PBOC anchors the yuan to the dollar and lets it fall against a broader group of currencies that includes the euro and the yen as well as the dollar.

Conversely, when the dollar advances, the central bank lets the yuan weaken against it while keeping it largely stable against the basket. This year, the dollar has weakened for longer than it has strengthened, resulting in a weaker yuan versus the basket than versus the dollar.

Many within China believe the yuan should be allowed to fall further as the country’s economy slows, but the central bank has had to take care that such weakening is gradual enough that it doesn’t speed up capital outflows.

Already, there are signs that outflows are accelerating again amid recent yuan weakening, after having slowed earlier this year. A net $55 billion left China in July, according to Goldman Sachs Group Inc., compared with an estimated $49 billion the previous month.

Beijing’s challenge is how to continue letting some air out of the yuan without triggering excessive outflows and market instability.

Ms. Dissaux of Millennium Global said she believes the market is underestimating the risk of yuan depreciation against the dollar. Investors in the yuan forwards market now expect the yuan to weaken by 2% over the next 12 months, down from 7% earlier in the year.

Strategists at Bank of America Merrill Lynch said in a recent note that the yuan remains vulnerable to renewed capital flight.

Yet even skeptics agree the timing of any market shift remains hard to predict.

“The Chinese will do everything in [their] power to maintain domestic and external stability” in the lead-up to the G-20 summit in early September and the yuan’s accession into the International Monetary Fund’s official basket of reserve currencies in October, said Eswar Prasad, a former top China hand at the IMF. “It’s unlikely for China itself to be a source of instability at least for the next three to four months.”

The real test will come for China’s yuan and its exchange-rate policy when the market starts to price in more aggressive Fed rate increases and the dollar resumes its upward march, investors say.

Senior Chinese officials have repeatedly pledged to keep the yuan largely stable and not to engage in beggar-thy-neighbor devaluations—a statement many say likely will get repeated next month when leaders from the Group of 20 nations meet in the eastern Chinese city of Hangzhou for a summit.

“In theory, [yuan] depreciation should benefit exports,” a senior Chinese official said. “But it’s not a good idea,” in part because the government has pledged to rebalance the economy away from export industries and toward consumer-facing businesses.

Any shift in investors’ stance toward China is likely to be deeply felt in financial markets. In a new report, “What Might Disrupt the ‘China Calm,’ ” UBS Group AG analysts said greater depreciation pressure on the yuan “may lead to higher global investor risk aversion.”

When Liu Chongfu returned home to his pig farm in December 2014 after months in detention, he was haunted by what he had done. Under interrogation, he later told his family, he falsely admitted to bribing government officials.

Back home, released without being charged, Mr. Liu had nightmares and splitting headaches. His conscience weighed on him, his family said. So he publicly recanted in March 2015. In a written statement sent to the court, he said interrogators had deprived him of sleep and threatened his family to extract a phony confession that helped send four other men to prison.

In his statement, also posted online, he said he lied “because they forced me to where there was no other way than death. I didn’t want to die.”

President Xi Jinping has called his anticorruption campaign, one of the leader’s defining initiatives, a “life or death” matter. It is among the most popular elements of his administration, given how corruption has been endemic in China and how it threatens to undermine confidence in Communist Party control.

Since the campaign began in 2013, its reach has allowed Mr. Xi to root out resistance to his rule and secure party control over a society that is more prosperous and demanding.

The farmer tried to retract his confession before, while still in detention. “I cannot violate my conscience to do this,” he told his interrogators, according to his statement, a transcript of a video he made with his lawyer. He knew it would send innocent officials to jail, he said, and that “the real tragedy is still to follow.”

The four were convicted anyway.

Since Mr. Liu publicly recanted, families of the four have tried to expose what they call the antigraft campaign’s overreach. Some joined more than 200 families of fallen officials nationwide in an open letter this summer accusing the campaign of creating a climate of fear.

The twin daughters of one official whom Mr. Liu’s confession helped imprison took to social media. “The person who bribed has reversed his confession,” they wrote. “My father was tortured into confessing.”

After Mr. Liu’s retraction, prosecutors threw him back in jail and this time won his conviction for issuing 550,000 yuan ($81,000) in cash bribes. He continued to deny handing out that cash.

This spring, he lost an appeal of his two-year prison sentence. His prison term ended early this month and he returned home, said a person familiar with his family. Mr. Liu, 54 years old, declined to comment. Taizhou law-enforcement authorities and related government agencies declined to comment or didn’t respond to inquiries.

Popular support

The Communist Party says the drive has punished more than 1 million officials with penalties ranging from demerits to dismissal to imprisonment. Its antigraft agency, the Central Commission for Discipline Inspection, has kept a relentless pace, with investigative teams descending on bureaucracies from Beijing down to provincial towns.

It is particularly in outlying areas where some officials, lawyers and suspects’ families have suggested the campaign has gone awry.

At his 2014 trial for accepting bribes of more than $1.5 million, Zhou Jianhua, who chaired the standing committee of the deep-south city of Xinyu’s legislature, told the court a former boss framed him for reporting the boss’s wife’s involvement in corruption. Mr. Zhou said in court he was tortured into confessing. He received a suspended death sentence, commuted to life.

In Binhai county, north of Shanghai, investigators for more than a month detained the head of the judicial bureau, Deng Chengwei, burned him with cigarettes and beat him with electric cables, his wife said. After confessing, Mr. Deng recanted in court. He was sentenced to 11½ years for taking 315,000 yuan in bribes.

The Binhai prosecutors’ office declined to comment. Prison authorities said they couldn’t make Mr. Deng available for comment. His wife said he falsely confessed.

It isn’t known whether the allegedly forced confessions are a significant part of Beijing’s campaign, and if those recanting are now telling the truth.

“Our party has internally checked all leaders and cadres’ cases, and they all have objective facts,” Wu Yuliang, the antigraft commission’s deputy secretary, told a media briefing this year. “The evidence is as strong as a mountain.” The commission didn’t respond to requests for comment.

In China, high-priority political campaigns typically come with targets and pressure on officials to pursue them. To meet Beijing’s economic-growth goals, local officials often strive to outdo one another. Results include wasteful overbuilding and padded statistics, economists say.

“The anticorruption campaign shouldn’t be about competition. We can’t have ‘anticorruption GDP’ and only look at numbers or make targets,” Huang Jianguo, then party secretary of Hunan province’s discipline inspection commission, was quoted as saying in state media last year. “Anticorruption needs to be based on the facts.” He couldn’t be reached for comment.

Fu Hualing, a University of Hong Kong law professor, said lack of clear ground rules in the campaign, and questions about whether it is being used to mete out punishment for other reasons—such as failure of officials in economically lagging areas—has created uncertainties. “Who will be prosecuted? Who will not? It’s clearly not a legal standard,” he said. “But what is the standard? Outsiders don’t know.”

A pig farmer’s tale

The anticorruption drive tore through Taizhou, the pig farmer’s town, as part of its nationwide rollout. Lying between green hills and the sea to the south of Shanghai, Taizhou is a prosperous area of farms and small factories.

A carpenter, Mr. Liu in the 1990s stumbled on a book, “How to Raise Pigs Fast.” He and his wife started a farm.

Pig prices fluctuated, and they ran up debt. Zhu Liuxia, their 28-year-old daughter, remembers shoveling manure with her sister before they were tall enough to reach the top of pigsties. She has been running the farm with her mother, working 14 hours a day. “There was never an easy time,” she said. “And then this happened.”

Investigators bore down on the agriculture bureau of Taizhou’s Jiaojiang district in 2014, part of a nationwide push to end misdeeds affecting farmers, including land seizures and misuse of poverty relief and other funds. Investigators detained officials including the bureau’s head and deputy, all of whom had dealings with Mr. Liu as a constituent.

Authorities took Mr. Liu into custody in April 2014. In May, investigation records show, interrogators questioned him five consecutive nights about whether he paid kickbacks for government subsidies.

After interrogators threatened to bankrupt his farm and to arrest his wife and daughter, he confessed, he said in his retraction video, a copy of which The Wall Street Journal obtained. They coached him, he said, to claim he gave cash bribes. Prosecutors said those bribes totaled 550,000 yuan from 2011 through 2013.

“They said if you don’t get your words right, either you die or get disabled,” Mr. Liu said in the video. Starting in May 2014, authorities began detaining the four officials and putting them on trial.

That August, Mr. Liu tried to recant when authorities offered to release him, family members said. They kept him jailed. Based on his earlier confession, the four officials were convicted and sentenced to 5 to 11 years in prison.

During trials, one wrote the Chinese character “injustice” on his palm, showing spectators, said the wife of one official on trial, who attended.

All confessed to taking cash bribes during pretrial interrogations, court documents show. Two said they also took supermarket gift cards of 1,000 yuan (about $150) to 2,000 yuan from Mr. Liu. One told the court he received cards totaling 9,000 yuan over five years.

Shopping-card-giving is common in China, especially over holidays, and Chinese businessmen say giving officials gifts and small sums of cash is customary. Holiday gifts of cards to officials are so pervasive as to not usually be prosecuted as bribery, say Chinese criminal lawyers. The charges against Mr. Liu didn’t include giving cards.

Under China’s 1997 criminal law, officials are generally liable only for accepting gifts of 5,000 yuan or above, with some exceptions for aggravating circumstances such as past bribe-taking or threatening demands. This year, the threshold rose to 30,000 yuan.

Three recanted during trial, saying they were innocent of taking cash bribes. Another recanted his cash-bribe confession during a subsequent trial on appeal.

One of them, Chen Xialin, a former soldier and deputy director with the agriculture bureau, had helped Mr. Liu get government subsidies. For a month in detention, Mr. Chen was interrogated overnight and forced to work days assembling holiday lights, according to a transcript of an interview he did with Mr. Liu’s lawyer. When Mr. Chen nodded off in the iron chair he was bound to, investigators shouted and bashed plastic bottles onto a table.

“You will definitely be doing jail time,” his interrogators told him, according to a transcript of his interrogation viewed by the Journal. “Even if you don’t confess, it’s what leaders have decided.” His only hope, they said, was to confess and try to get a lighter sentence. He confessed to receiving 120,000 yuan in cash bribes and 8,000 yuan in supermarket gift cards over four years from Mr. Liu.

Mr. Chen recanted in court, denying taking bribes and saying sleep deprivation and duress forced his false confession, court documents show. The court sentenced him to 10 years and three months imprisonment.

The four officials, incarcerated now, couldn’t be reached for comment. Each of their wives told the Journal her husband was innocent.

Mr. Liu was released without charge. That wasn’t unusual—China has until recently focused on punishing bribe takers, not givers.

Back home, his wife and daughter said, he stopped tending the pigs and would break into tears. “He used to see the world as good,” said Ms. Zhu, his daughter. “But things became dark for him: He just thought, ‘How could the world be like this?’ ”

About three months later, Mr. Liu issued his retraction. When it surfaced online, “it was like seeing sunlight,” said the wife of one of the imprisoned officials.

Four months later, Mr. Liu was arrested and tried for bribery, convicted and imprisoned.

On a hot summer day, the wives of the officials whom Mr. Liu’s confession had helped jail were in the court audience. They had hoped Mr. Liu’s retraction would help free their husbands. As the trial proceeded, Mr. Chen’s wife, Xu Guanqing, feeling the court was arbitrarily finding Mr. Liu guilty, stood up and shouted sarcastically: “If you say he’s guilty, well, then he must be guilty?” she recalled. Bailiffs ejected her.

One recent day in a room with peeling wallpaper, Ms. Xu stared around the 800-square-foot apartment the couple has shared for two decades. They used to watch news about the national anticorruption campaign on television.

Now that the campaign has hit home, she feels lost. “Look at the conditions we are living in,” she said, pointing to rips in their couch to demonstrate there was no evidence of bribe-fueled extravagance. For years, she said, she has worked a warehouse job to augment Mr. Chen’s 6,000-to-7,000-yuan monthly salary. “This is truly a miscarriage of justice.”

The court ordered Mr. Chen’s family to pay 40,000 yuan in fines and return the money he was convicted of taking, Ms. Xu said. Officers searched the house and saw “we had nothing to give.”

Ms. Xu is allowed to visit her husband once a month for a half-hour, she said. During one visit, she brought news his father had died.

“I hate Liu Chongfu,” she said of the pig farmer. “But I also sympathize with him. He was also forced into doing what he did.”

Mr. Liu’s family has been keeping a low profile in town. Mr. Liu, now back home, is showing signs of depression, and the family has taken him to the hospital for treatment, said a person familiar with the family. He doesn’t want to speak publicly, the person said, because the family is worried police are monitoring them.

Pursuing the “peasants” must send fear far and wide in China, since it is reminiscent of Mao Tse-tung’s “Great Leap Forward” between 1958 and 1960, when an estimated 30-40 million Chinese died.

Like Stalin in the USSR, Mao’s crimes involved Chinese peasants, many of whom died of hunger from man-made famines under collectivist orders that stripped them of all private possessions. The Communist Party forbade them even to cook food at home; private fires were outlawed; and their harvests were taken by the state.

Those who dared to question Mao’s agricultural policies—which sought to maximize food output by dispossessing the nation’s most productive farmers—were tortured, sent to labor camps, or executed.

AMERICAN presidents have a habit of describing their Chinese counterparts in terms of awe. A fawning Richard Nixon said to Mao Zedong that the chairman’s writings had “changed the world”. To Jimmy Carter, Deng Xiaoping was a string of flattering adjectives: “smart, tough, intelligent, frank, courageous, personable, self-assured, friendly”. Bill Clinton described China’s then president, Jiang Zemin, as a “visionary” and “a man of extraordinary intellect”. Donald Trump is no less wowed. The Washington Post quotes him as saying that China’s current leader, Xi Jinping, is “probably the most powerful” China has had in a century.

Mr Trump may be right. And were it not political suicide for an American president to say so, he might plausibly have added: “Xi Jinping is the world’s most powerful leader.” To be sure, China’s economy is still second in size to America’s and its army, though rapidly gaining muscle, pales in comparison. But economic heft and military hardware are not everything. The leader of the free world has a narrow, transactional approach to foreigners and seems unable to enact his agenda at home. The United States is still the world’s most powerful country, but its leader is weaker at home and less effective abroad than any of his recent predecessors, not least because he scorns the values and alliances that underpin American influence.

The president of the world’s largest authoritarian state, by contrast, walks with swagger abroad. His grip on China is tighter than any leader’s since Mao. And whereas Mao’s China was chaotic and miserably poor, Mr Xi’s is a dominant engine of global growth. His clout will soon be on full display. On October 18th China’s ruling Communist Party will convene a five-yearly congress in Beijing. It will be the first one presided over by Mr Xi. Its 2,300 delegates will sing his praises to the skies. More sceptical observers might ask whether Mr Xi will use his extraordinary power for good or ill.

World, take note

On his numerous foreign tours, Mr Xi presents himself as an apostle of peace and friendship, a voice of reason in a confused and troubled world. Mr Trump’s failings have made this much easier. At Davos in January Mr Xi promised the global elite that he would be a champion of globalisation, free trade and the Paris accord on climate change. Members of his audience were delighted and relieved. At least, they thought, one great power was willing to stand up for what was right, even if Mr Trump (then president-elect) would not.

Mr Xi’s words are heeded partly because he has the world’s largest stockpile of foreign currency to back them up. His “Belt and Road Initiative” may be puzzlingly named, but its message is clear—hundreds of billions of dollars of Chinese money are to be invested abroad in railways, ports, power stations and other infrastructure that will help vast swathes of the world to prosper. That is the kind of leadership America has not shown since the post-war days of the Marshall Plan in western Europe (which was considerably smaller).

Mr Xi is also projecting what for China is unprecedented military power abroad. This year he opened the country’s first foreign military base, in Djibouti. He has sent the Chinese navy on manoeuvres ever farther afield, including in July on NATO’s doorstep in the Baltic Sea alongside Russia’s fleet. China says it would never invade other countries to impose its will (apart from Taiwan, which it does not consider a country). Its base-building efforts are to support peacekeeping, anti-piracy and humanitarian missions, it says. As for the artificial islands with military-grade runways it is building in the South China Sea, these are purely defensive.

Unlike Vladimir Putin, Russia’s president, Mr Xi is not a global troublemaker who seeks to subvert democracy and destabilise the West. Still, he is too tolerant of troublemaking by his nuke-brandishing ally, North Korea. And some of China’s military behaviour alarms its neighbours, not only in South-East Asia but also in India and Japan.

At home, Mr Xi’s instincts are at least as illiberal as those of his Russian counterpart. He believes that even a little political permissiveness could prove not only his own undoing, but that of his regime. The fate of the Soviet Union haunts him, and that insecurity has consequences. He mistrusts not only the enemies his purges have created but also China’s fast-growing, smartphone-wielding middle class, and the shoots of civil society that were sprouting when he took over. He seems determined to tighten control over Chinese society, not least by enhancing the state’s powers of surveillance, and to keep the commanding heights of the economy firmly under the party’s thumb. All this will make China less rich than it should be, and a more stifling place to live. Human-rights abuses have grown worse under Mr Xi, with barely a murmur of complaint from other world leaders.

Liberals once mourned the “ten lost years” of reform under Mr Xi’s predecessor, Hu Jintao. Those ten years have become 15, and may exceed 20. Some optimists argue that we have not yet seen the real Mr Xi—that the congress will help him consolidate his power, and after that he will begin social and economic reforms in earnest, building on his relative success in curbing corruption. If he is a closet pluralist, however, he disguises it well. And alarmingly for those who believe that all leaders have a sell-by date, Mr Xi is thought to be reluctant to step down in 2022, when precedent suggests he should.

Reasons to be fearful

Mr Xi may think that concentrating more or less unchecked power over 1.4bn Chinese in the hands of one man is, to borrow one of his favourite terms, the “new normal” of Chinese politics. But it is not normal; it is dangerous. No one should have that much power. One-man rule is ultimately a recipe for instability in China, as it has been in the past—think of Mao and his Cultural Revolution. It is also a recipe for arbitrary behaviour abroad, which is especially worrying at a time when Mr Trump’s America is pulling back and creating a power vacuum. The world does not want an isolationist United States or a dictatorship in China. Alas, it may get both.

As with so many UK and European views of the world, this one is naïve and delusional. Russia’s depot Putin has been made into some colossal “superman” too, which he is not. Putinism will not survive Putin; that much is certain.

As to whether the world should be wary of Xi Jinping, this is always true when the leader of a great nation attains enormous power, which can be used for good or evil. Hitler, Stalin and Mao were evil personified.

Both Xi Jinping and China need Donald Trump and the United States. China has many fissures, not the least of which are its economy and the menaces of Kim Jong-un and North Korea.

Lastly, Donald Trump is right: globalization and “free trade” must be in America’s best interests; and so-called man-made “global warming” is a hoax, and nothing more than a $34 trillion wealth transfer scheme.